SBI Holdings, Inc. Financial Results for the Nine-month Period - - PowerPoint PPT Presentation

Strategic Business Innovator

January 29, 2015

SBI Holdings, Inc.

Financial Results

for the Nine-month Period Ended Dec. 31, 2014

(Fiscal Year Ending March 31, 2015)

1

Note: Fiscal Year (“FY”) ends March 31 of the following year

The items in this document are provided as information related to the financial results and the business strategy of the SBI Group companies and not as an invitation to invest in the stock or securities issued by each company. None of the Group companies guarantees the completeness of this document in terms of information and future business strategy. The content of this document is subject to revision or cancellation without warning.

2

• 3. Transition of 5-ALA related business

from the preparation phase to the monetization phase

• 1. Upon the passage of 15 years of

establishing a large scale business, the Company's consolidated results are on the verge of a rapid growth stage

• 2. Current status and new challenges of

the Financial Services companies that have entered a rapid growth stage

3

(1) Operating income for the 9 month FY2014 period exceeded the full-year record of the past (2) Adhere to the ROE-oriented management principle, and improve shareholder returns (3) Improved stability of SBIH's financial base

• 1. Upon the passage of 15 years of

establishing a large scale business, the Company's consolidated results are on the verge of a rapid growth stage

4

(1) Operating income for the 9 month FY2014 period exceeded the full-year record of the past

• Operating income for the 9 month FY2014 period

achieved JPY 53.4bn, which exceeded the past record high of JPY 49.6bn in FY2005

• Profit attributable to owners of the company

achieved JPY 35.5bn, significant increase of 75.8% year-on-year

• ROE for the 9 Month FY2014 period reached 10.1%,

which exceeded the milestone target of 10%

5

9 Months FY2013

(Apr. –Dec. 2013)

9 Months FY2014

(Apr. –Dec. 2014)

YoY % change Operating revenue

177,210 174,265

• 1.7

Operating income

39,508 53,440 +35.3

Profit before income tax expense

37,154 49,549 +33.4

Profit for the period

21,062 31,827 +51.1

Profit attributable to owners of the Company

20,185 35,490 +75.8 Achieved a Significant Increase in Each Item Including Record Operating Income

ROE (%)

6.4 10.1 +3.7p.

* Shows the increase in percentage points

(Unit: JPY million)

9 Month FY2014 Period Consolidated Performance (IFRS)

6

Operating Income for the 9 Month FY2014 Period Exceeded the Full-year Record of the Past

49.6 23.1 42.6 4.4 3.4 8.9 4.9 17.4 42.2 53.4

10 20 30 40 50 60

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 9M FY2014 (JPY billion)

Operating Income for the 9 Month FY2014 Period：JPY 53.4bn

• Operating income for the 9 month FY2014 period already

exceeds the full-year record of the past Operating income in the past 10 years

IFRS J-GAAP Posted record

• perating income of

JPY 49.6bn in FY2005

* Results for the fiscal years before FY2012 are based on J-GAAP. The Company introduced IFRS from FY2012.

7

9 Months FY2013

(Apr.–Dec. 2013)

9 Months FY2014

(Apr.–Dec. 2014)

YoY % change Financial Services Business

109,030 119,817 +9.9

Asset Management Business

59,022 43,206

• 26.8

Biotechnology- related Business

2,139 1,605

• 25.0

Others

(Primarily Housing and Real Estate Business)

8,150 10,286 +26.2 9 Months FY2014 Operating Revenue by Segment (IFRS)

(Unit: JPY million)

[Year-on-year]

* Figures are before elimination of inter-segment transactions

8

9 Months FY2013

(Apr.–Dec. 2013)

9 Months FY2014

(Apr.–Dec. 2014)

YoY % change Financial Services Business

28,475 53,584 +88.2

Asset Management Business

12,945 2,286

• 82.3

Biotechnology- related Business

• 1,332
• 2,360

―

Others

(Primarily Housing and Real Estate Business)

2,289 1,415

• 38.2

* Figures are before elimination of inter-segment transactions (Unit: JPY million)

9 Months FY2014 Profit before Income Tax Expense by Segment (IFRS)

[Year-on-year]

9

[Business Overview by Segment]

10

① Financial Services Business

• While other online securities companies experienced profit

decreases amid a 27.6% year-on-year decline in average daily individual stock brokerage trading value, SBI SECURITIES’9 months FY2014 profit before income tax expense increased to a record high

• SBI Japannext, SBI FXTRADE, Morningstar Japan

(consolidated), SBI MONEY PLAZA and SBI Sumishin Net Bank (shares of results of associates using the equity method) achieved record highs in profit before income tax expense for the 9 month FY2014 period, respectively

• Performance markedly improved at SBI Insurance, SBI Card,

and other loss-making companies as well

11

YoY Change

+324 +66 +1,052 +362 +2,211

(Based on IFRS, Unit: JPY million, Amounts are rounded to the nearest JPY million)

[Profit before income Tax Expense]

FY2013 FY2014

9 month period

(Apr.-Dec. 2013)

1Q 2Q 3Q

9 month period

(Apr.-Dec. 2014)

SBI SECURITIES

24,908

6,692 8,484 10,056

25,232

SBI Japannext

766

260 268 304

832

SBI Liquidity Market

1,230

502 613 1,166

2,282

SBI FXTRADE

794

203 311 642

1,156

SBI Insurance

• 2,432

135

• 411

55

• 221

Record high

Significant Improvement Achieved quarterly profitability

Profit Before Income Tax Expense of Major Financial Services Business Companies (i)

Record high Record high

Achieved quarterly profitability

12

Profit Before Income Tax Expense of Major Financial Services Business Companies (ii)

YoY Change

+318 +17 +1,403 +5,482

FY2013 FY2014

9 month period

(Apr.-Dec. 2013)

1Q 2Q 3Q 9 month period

(Apr.-Dec. 2013)

SBI MONEY PLAZA

880

241 461 497

1,198

Morningstar Japan

(includes its subsidiary, i.e. SBI Asset Management)

772

335 228 226

790

SBI Card

• 2,257
• 294
• 273
• 287
• 854

SBI Sumishin Net Bank

(Shares of results of associates using the equity method)

87

232 1,595 3,742

5,569

*

(Based on IFRS, Unit: JPY million, Amounts are rounded to the nearest JPY million)

Record high Record high Record high

Significant Improvement

* SBI Sumishin Net Bank recorded profit/loss on revaluation of securities based on IFRS, due to the change in the valuation of treasuries held. Therefore the amount are different from that based on J-GAAP.

[Profit before income Tax Expense]

13

② Asset Management Business

• 14 IPOs or M&As of SBI Group investee companies are

expected in FY2014

• SBI Savings Bank recorded profit before income

tax expense of approx. JPY 12.0bn, and the soundness of the bank's loans improved

14

Quarterly Financial Results

• f the Asset Management Business

FY2013 FY2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q

Operating Revenue

39.0 10.9 9.1 13.7 9.9 15.2 18.0

Profit before income tax expense

21.9

• 3.7
• 5.3
• 4.0
• 2.3

1.7 2.8

Profit/loss from the change in fair value and profit/loss on sales

• f investment

securities

22.8

• 4.8
• 5.4
• 3.2
• 5.6
• 0.8
• 0.1

SBI Savings Bank

0.8 1.2 1.1 1.0 5.0 2.7 4.4

Others*

• 1.7
• 0.1
• 1.0
• 1.8
• 1.7
• 0.2
• 1.5

(IFRS, JPY billion)

[Asset Management Business]

*Others include the SG&A of the Asset Management Business and profits and losses of consolidated investee companies

15

IPO and M&A Deals Prospect for FY2014

Up to FY2012 FY2013 full year FY2014 full year prospect

IPO and M&A deals

167 14 14

*

EXIT Date Company Market (Country)

• Apr. 2

Smart Navi Co.,Ltd. M&A June 16 NEWTON FINANCIAL CONSULTING, Inc. TSE JASDAQ July 23 Nippon View Hotel Co., Ltd. TSE 2nd Section

• Aug. 5

WH Group Limited HKEx Main Board

• Aug. 11

Pandora TV Co., Ltd KONEX (Korea)

• Sept. 15

GCS HOLDINGS, INC. GTSM (Taiwan)

• Sept. 25

RIBOMIC Inc. TSE Mothers

• Oct. 1

YAPPA Corporation M&A

• Oct. 1

Kakao Corp.

M&A

• Oct. 22

Ceres inc. TSE Mothers

• Dec. 25

Tokyo Board Industries Co., Ltd

TSE 2nd Section

• Dec. 29

Yest Co., Ltd.

KONEX (Korea)

• Jan. 1, 2015

Uphills, Inc.

M&A

* Includes portfolio companies (FY2009: 3 companies, FY2010: 6 companies, FY2013: 2 companies) of New Horizon Capital, the second fund, in which SBIH invests as a limited partner.

In FY2014, 9 companies have already conducted an IPO, and 4 companies were M&A'd

16

9 Months FY2013 9 Months FY2014 YoY % change Operating revenue

28,274 29,751 +5.2

Operating income

3,558 12,418 +249.0

Profit before income tax expense

3,038 12,030 +296.0

(JPY million)

9 Months FY2014 Results

(SBIH’s consolidated accounts basis; IFRS)

SBI Savings Bank Recorded Profit before Income Tax Expense of Approx. JPY 12.0bn, Contributing to the Asset Management Business’ Results

• With the backdrop of a firm real estate market, profits were recorded

through substantive collection efforts that resulted in loan collections exceeding book values

• Prospectively may achieve quarterly profit in the Oct.-Dec. 2014 period on a

K-GAAP basis, with capital adequacy ratio of over 10%

SBI Savings Bank:

Grew to become a profit driver of the Asset Management Business

17

102.64 99.6 100.0 100.4 100.8 101.2 101.6 102.0 102.4 102.8

Jan May Sep Jan May Sep Jan May Sep

2012 2013

• Real estate transaction stimulation policies of the South Korean government have

succeeded, and housing prices continue to recover rapidly

• Transaction amount of home sales is steadily firming, compared with the previous year
• From Oct. 2014, the Bank of Korea cut its benchmark interest rate to 2.0%, a 4-year low,

with the expectations of supporting economic activities.

57,333 65,236 73,420 68,555 78,876 88,653 20,000 40,000 60,000 80,000 Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec

2012 2013 2014

The Tailwind of SBI Savings Bank's Improved Business Environment

2014

• Dec. 2014:

South Korean Housing Purchase Price Index Average Monthly Transaction Amount

• f Home Sales in South Korea

(Nationwide; Mar. 2013 = 100) (houses)

Source: The Bank of Korea Source: Ministry of Land, Infrastructure and Transport (Korea)

SBI Savings Bank:

18

1,954.8 1,625.9 1,580.3 1,626.8 1,776.6 2,146.3 2,140.0

45.3 51.6 51.2 46.7 41.2 10 20 30 40 50 1,000 2,000 3,000 June Sept. Dec. Mar. June Sept. Dec.

Balance of performing loans (left axis) Delinquency % (right axis) (KRW billion) (%)

33.8 29.8 The balance becomes temporarily flat, owing to repayments from a number of

• Dec. closing companies

* Converted at KRW 1 ＝JPY 0.11

Performing Loans and Delinquency Ratio

• Balance of performing loans continued to be in an underlying upward trend,

and new credits were acquired quarterly at a pace of KRW 600bn (approx. JPY 66bn*)

• Delinquency ratio declined, and soundness of loans improved

SBI Savings Bank: 2013 2014

19

To Become the No.1 Savings Bank, Both in Name and Actuality

 Endeavoring to acquire new customers, and increase new credits by utilizing placement agents  Planning to develop auto-loan business within this year, as a part

• f service diversification

 Promoting aggressive purchase of loans from other banks  Promoting online banking services by riding the momentum created by deregulation

Targeting an IPO in 2-3 years

After implementing mergers and integration between SBI Savings Bank and its three affiliated banks, effective Oct. 31, 2014, SBI Savings Bank has become the only savings bank whose assets exceed KRW 3tn (approx. JPY 330bn) in South Korea, and SBI Savings Bank will endeavor to strengthen its brand. [Efforts to pursue more sustainable revenue ]

* Converted at KRW 1 ＝JPY 0.11

SBI Savings Bank:

20

SBI Investment KOREA Expands the Management of Funds from South Korean Government Agencies ①

Future Creation M&A Fund

Commitment amount: KRW 50.0bn (approx. JPY 5.5bn*), of which KRW 20.0bn was invested by South Korean government agencies Mission: To support mid-sized South Korean companies conducting M&A and to enter the ASEAN region

KONEX Market Vitalization Fund Overseas Expansion Platform Fund

Commitment amount: KRW 60.0bn (approx. JPY 6.6bn*), of which KRW 25.0bn will be invested by South Korean government agencies Mission: To support the vitalization of the KONEX market, an emerging market in South Korea Commitment amount: KRW 60.0bn (approx. JPY 6.6bn*), of which KRW 30.0bn will be invested by South Korean government agencies Mission: To support mid-sized and venture companies in South Korea to expand into the ASEAN region

* Converted at KRW 1 = JPY 0.11

21

Digital Contents Fund

Commitment amount: KRW 25.0bn (approx. JPY 2.7bn*), of which KRW 12.5bn will be invested by South Korean government agencies Mission: To support the integration of South Korean contents industry and IT industry, both of which are expected to play a key role in Korea’s future economic growth

2014 KIF Fund

Commitment amount: KRW 30.0bn (approx. JPY 3.3bn*), of which KRW 17.0bn will be invested by South Korean government agencies Mission: To develop South Korean venture companies involved in the Telecommunications and IT industries

SBI Investment KOREA Expands the Management of Funds from South Korean Government Agencies ②

• SBI Investment KOREA was selected to manage a total of 5 funds, with the

aggregate commitment amount of KRW 225.0bn (approx. JPY 24.7bn*), from Jan. 2014.

• In addition, currently endeavoring to be selected to manage an additional 2

funds (the aggregate commitment amount of KRW 600bn (approx. JPY 66bn*)) this year.

* Converted at KRW 1 = JPY 0.11

22

• Consolidated loss posted by the Biotechnology-

related Business for the 9 month FY2014 period increased year-on-year primarily because extraordinary factors boosted profit in FY2013

• Airing of TV commercials, efforts to increase the

number of prescription pharmacies and other stores and offering an expanded range of products produced results, and shipment volumes of health foods and cosmetics containing 5-ALA increased substantially

③ Biotechnology-related Business

23

Profit before income tax expense

9 Months FY2013

(Apr. –Dec. 2013)

9 Months FY2014

(Apr. –Dec. 2014)

Total of the Biotechnology- related Business

• 1,332
• 2,360
• f which, SBI Biotech
• 396
• 613

Quark Pharmaceuticals

• 94
• 761

SBI Pharmaceuticals

• 842
• 809

SBI ALApromo

• 35
• 356
• SBI Biotech discontinued a drug discovery project that was considered to have little prospect

for a commercialization, and as such recorded future charges related to the discontinuance

• Quark Pharmaceuticals led to a year-on-year increase in loss in FY2014 due to the

extraordinary factors that boosted profit in FY2013 (such as the transfer of seeds for future drug development activities to a Japanese company)

• SBI ALApromo is actively engaging in promotion in FY2014, and SG&A expenses have

increased.

Decrease in deficit Increase in deficit

Profit before Income Tax Expense of the Biotechnology- related Business for 9 Months FY2014 (IFRS)

(JPY million)

Increase in deficit Increase in deficit

③ Biotechnology-related Business:

24

Current State of IPO Readiness of SBI Biotech ① [Management Structure]

Although SBI Biotech delayed a planned 2014 IPO, following the general meeting of shareholders in late Mar. 2015, the company plans to increase corporate value by appointing a person with specialized in the drug discovery field and management experience in venture firm as outside director. Once current managing director Takeshi Irie assumes office as representative director and president, the company will resume IPO preparations. （Lead manager: Mizuho Securities)

③ Biotechnology-related Business:

The previous representative director of SBI Biotech resigned because of poor health, and a change of representative directors

• ccurred on Sept. 30, 2014

25

Licensing partner Adaptation disease Pre- clinical Phase I Phase II Phase III ①QPI-1002 Novartis International AG Kidney Transplantation (DGF) ②PF-655 Pfizer Inc. Diabetic macular edema (DME) Glaucoma ③Anti-ILT 7 antibody MedImmune, Inc. (Subsidiary of AstraZeneca) Autoimmune diseases

Pre- clinical Planning to start at the latest by the fall of 2015 Preparing for Phase II a

In light of favorable results of a Phase II clinical trial for a therapeutic agent for prevention of impairment of organ function after kidney transplantation from subsidiary Quark Pharmaceuticals (exclusive worldwide license option for development and commercialization granted to Novartis), an IPO requirement, the plan is to initiate a Phase III trial in the U.S. by around autumn at the latest.

Completed Phase II a

Current State of IPO Readiness of SBI Biotech ② [Pipeline Drugs that is an IPO Requirement]

③ Biotechnology-related Business:

26

1.0 1.7 1 2

9 Months FY2013 9 Months FY2014

Comparison of shipment volumes (SBI ALApromo)

* 9 Months FY2013 = 1

<Supplements> ALAPlus, ALAPlus GOLD, ALAPlus GOLD 1day、Natu- ALA BCAA, Natu-ALA Bio, ALAPlus Biotin, ALAPlus CoQ10, etc. <Cosmetics> ALAPlus (moisturizing cream, Essential lotion), etc.

FY2014 (Apr.–Dec. 2014) cumulative shipment volumes surpassed FY2013 full-year total Scheduled to release a full-body moisturizing cream (planned product name: ALAPi) as a new product in Mar. Up by 67.6% year-on-year

(Apr. –Dec. 2013) (Apr. –Dec. 2014)

Large Increase in Shipment Volumes of Health Foods and Cosmetics Containing 5-ALA

③ Biotechnology-related Business:

27

52 162 216 238 229 390 599 1,005 2,078 2,683 3,433 4,585 1,000 2,000 3,000 4,000 5,000 Mar. Sept. Mar. Sept. Nov. Dec. Jan. Feb. Mar. Jun. Sept. Dec.

Promotion including TV commercials and POP display at drugstores of the ALAPlus series featuring singer Hiromi Go stepped up

Change in the number of stores that

• ffer SBI ALApromo products

(Mar. 2012-)

(stores)

2012 2013 2014

The number of stores has rapidly increased since the start of deliveries to distributors in the autumn of 2013.

Start of the first TV commercials

(since Feb. 2014)

(EOM)

Start of the second TV commercials

(since June 2014)

Consulting Pharmacies and Drugstores Nationwide that Offer SBI ALApromo Products Amount to 4,585 Stores (As of the end of Dec. 2014)

③ Biotechnology-related Business:

Targeting 5,000 stores by the end of the fiscal year

28

(2) Adhere to the ROE-oriented management principle, and improve shareholder returns

① Cumulative ROE for 9 Months FY2014 reached 10.1%, which exceeded the milestone target of 10% ② Generation of cash flow through further "Selection and Concentration," for use in measures that will further improve ROE, such as stock repurchase ③ Enhance shareholder return through measures such as dividend increases and shareholder benefits

29

①Aug. 2007 SBI Japannext began operation of PTS ②Sept. 2007 SBI Sumishin Net Bank commenced business ③Jan. 2008 SBI Insurance commenced business ④Nov. 2008 SBI Liquidity Market started operations ⑤Mar. 2012 Sale of the former SBI VeriTrans ⑥May 2012 SBI FXTRADE started operations ⑦Sept. 2012 Consolidated SBI Japannext ⑧Mar. 2013 Consolidated current SBI Savings Bank ⑨Aug. 2014 Sale of SBI Mortgage

29.0 23.1 18.0 1.7

• 6.2

0.7 1.2

• 0.1

1.3 6.8 10.1

• 10

10 20 30

FY2004 FY2006 FY2008 FY2010 FY2012 FY2014

Change in ROE

Business environment

Suspension of investment funds by BNP Paribas Collapse of Lehman Brothers Exposure of Greece debt problem Inauguration of G20 summit European debt crisis Recurrence of Greece debt problem Economic deterioration in developing countries Abenomics The Livedoor shock

Specific measures

① ② ③ ④ ⑤ ⑥ ⑦

Expansion of scale

Emphasis on Profitability ("Selection and Concentration")

Business strategy

⑧ ⑨

① Improving ROE:

While Current ROE Exceeded the Milestone Target of 10%, Endeavoring to Further Improve ROE

9M

30

• Generated cash will be appropriated to strengthen

businesses with high return on invested capital, and to improve various financial ratios

• Share repurchases will also be considered appropriately

Endeavoring to improve ROE

Improving ROE through Further Generation of Cash Flow

② Endeavoring to Further Improve ROE:

• Through the sales of non-core businesses, IPOs and intra-

group reorganizations basically accomplished, recovered JPY 45bn through sales of subsidiaries, including partial sales since Mar. 2012

• Also, for FY2014, sales amount of the real estate holdings is

expected to be approx. JPY 18bn

31

② Commemorative dividend: JPY 5 per share in commemoration of the Company’s 15th anniversary

In the event that the 4Q FY2014 results continues its steady growth path, positively considering a further increase of the

• rdinary dividend

Based on the Strong Financial Results, Year-end Dividend for FY2014 is Expected to Increase

① Ordinary dividend: JPY 20 per share in consideration of the positive results for 1H FY2014

Forecasts JPY 25 per share, up JPY 5 from the previous year

[Dividend forecast (results) per share] End of 2Q Year-end Full-year

FY2014 (forecast)

－

25

(Ordinary dividend: 20) (Commemorative dividend: 5)

25

(Ordinary dividend: 20) (Commemorative dividend: 5)

FY2013 (results)

－

20 20

(Unit: JPY)

Note: The dividend forecast shown above is an estimate made as of the current date. Actual dividend payments may differ from these forecasts due to various reasons.

③ Strengthening Shareholder Return:

32

Shareholders who have held shares for more than 1 year and who hold 1,000 (10 units) or more shares as of

• Mar. 31, 2015

2 packs 2 packs 1 pack

Other shareholders who hold 100 shares (1 unit)

• r more

2 packs

－ － [Details of shareholder benefits]

*Shareholders listed or recorded in the shareholder register as of Mar. 31, 2015 are eligible. ALAPlus

(priced at JPY 2,980 (incl. tax))

ALAPlus GOLD

(priced at JPY 9,800 (incl. tax))

ALAPlus Essential Lotion

(priced at JPY 8,400 (incl. tax))

In addition, all shareholders, including those who hold less than 1 unit (1–99 shares), will receive 1 discount coupon for a preferential discount of 50% from the regular prices of all SBI ALApromo dietary supplements and cosmetics. Qualified shareholders Details

Further Strengthen Shareholder Benefits

③ Strengthening Shareholder Return:

33

(3) Improved stability of SBIH's financial base

34

Summary of Cash Flows for the 9 Month FY2014 Period

9 Months FY2014

Net cash generated from operating activities

71,481 Profit before income tax expense 49,549

Increase in assets/liabilities related to securities business

(*Positive contribution primarily owing to the increase in deposit assets of SBI SECURITIES)

32,798 Others

(*Negative contribution primarily owing to the acquirement of loans of SBI Savings Bank)

• 10,866

Net cash generated from investing activities

(*Positive contribution primarily owing to disposal of investment securities and shares of SBI Mortgage)

60,699

Net cash used in financing activities

(*Negative contribution primarily owing to redemption of bonds and repayment of borrowings)

• 23,921

Net increase in cash and cash equivalents

108,259 Aggressively promoting collection of investments and reducing liabilities

(Unit: JPY million)

35

• Mar. 31, 2014
• Dec. 31, 2014

Interest-bearing Debt Ratio

135.2 97.0

Ratio of Equity Attributable to Owners of the Company

22.2 23.1

*2 Interest-bearing Debt / Equity Attributable to Owners of the Company. Interest-bearing Debt does not include Margin Transaction Liabilities. *1 Assets related to securities business = cash segregated as deposits + margin transaction assets +

• ther assets related to securities business

Liabilities related to securities business = margin transaction liabilities + guarantee deposits received + deposits from customers + other liabilities related to securities business *3 Equity attributable to owners of the Company/Total Assets

*2 *3

Consolidated Financial Indicators of SBI Holdings (%)

Substantive figures after adjusting for asset and liability accounts associated specifically with the securities company *1

SBI Holdings’ Stable Financial Base

36

• 2. Current status and new challenges
• f the Financial Services

companies that have entered a rapid growth stage

(1) Securities-related businesses (2) Insurance-related businesses (3) Banking-related businesses

37

(1) Securities-related Businesses

① In an environment where a 27.6% year-on-year decline in average daily individual stock brokerage trading value led to a decline in profits for its industry peers, SBI SECURITIES'

• perating income for the 9 month FY2014 period achieved a

0.3% increase year-on-year All income categories recorded a record-high ② Competition with the online securities companies has concluded ③ Current business strategy for the securities-related businesses

~ Structuring a business foundation to compete with major face-to-face securities companies ~

38

① In an environment where a 27.6% year-on-year

decline in average daily individual stock brokerage trading value led to a decline in profits for its industry peers, SBI SECURITIES' operating income for the 9 month FY2014 period achieved a 0.3% increase year-

• n-year

All income categories recorded a record-high

39

1,309.2 1,103.0 2,064.8 2,595.0 1,439.6 1,507.7 961.1 1,332.61,251.3 1,317.8 1,656.6 1,540.8 1,219.9 1,005.6 1,091.6 1,457.0 1,214.3 1,085.0 1,190.2 886.1 1,221.5 861.7

500 1,000 1,500 2,000 2,500 3,000 3,500

• Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.

7,000 9,000 11,000 13,000 15,000 17,000 Average daily individual brokerage trading value (left-side scale) End-of-month Nikkei Average (right-side scale)

• 27.6%

FY2013 FY2014 ① SBI SECURITES’ 9 Months FY2014 Results

Average daily individual brokerage trading value (2 market total *)

Average Daily Individual Brokerage Trading Value Trended Lower as Compared to FY2013

9 Months FY2013 Individual Brokerage Trading Value JPY 294,771.7bn 9 Months FY2014 Individual Brokerage Trading Value JPY 213,399.8bn

(JPY billion) (JPY)

*Japanese stocks listed on Tokyo Stock Exchange and Nagoya Stock Exchange (Including TSE Mothers, JASDAQ and NSE Centrex) Source: Complied by SBIH from disclosed data from TSE

(until 16th)

40

(Unit: JPY million)

[Year-on-year]

9 Months FY2013 (Apr.-Dec. 2013) 9 Months FY2014 (Apr.-Dec. 2014) YoY % change

Operating Revenue

56,139 55,974

• 0.3

Net Operating Revenue

53,062 52,290

• 1.5

Operating Income

24,907 24,976 +0.3

Ordinary Income

24,927 25,039 +0.5

Net Income

13,610 14,635 +7.5

SBI SECURITIES 3Q FY2014 Consolidated Results (J-GAAP)

* Since SBI SECURITIES has sell off its sole consolidated company, SBI Benefit Systems, in FY2013, it discloses its financial results on a non-consolidated basis from the current fiscal year. Also the results for the 9 monts FY2013 presented above are non-consolidated figures.

• Owing to the contribution of financial income in lieu of the decrease in brokerage

commissions, operating revenue decreased merely 0.3% year-on-year

• All income categories recorded a record high, owing to factors such as the

diversification of earnings sources

• On the other hand, net operating revenue decreased by 1.5% year-on-year, owing

to the increase in financial expense related to the increase in financial revenue

① SBI SECURITES’ 9 Months FY2014 Results

41

307 287 323 517 575 633 706 691 663 698 713 100 200 300 400 500 600 700

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

SBI SECURITIES’ Financial Revenue and Open Interest Credit Balance Significantly Increased

Open Interest Credit Balance (EOM) Quarterly balance steadily increasing

(JPY billion)

FY2012 FY2013 FY2014

17,666 21,159

5,000 10,000 15,000 20,000

9 months 9 months

+19.8% YoY

Financial Revenue

(JPY million)

FY2013 FY2014

① SBI SECURITES’ 9 Months FY2014 Results

42

1,077.8 937.3 894.1 843.9 778.4 765.1 738.3 722.4 617.1 555.1 502.8 200 400 600 800 1,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

SBI SECURITIES’ Investment Trust Fees and Investment Trust Balance Both Hit a Record

(JPY billion)

Investment Trust Balance

Quarterly balance hit historical high

FY2012 FY2013 FY2014

* Includes MMF, deposits of Chinese Fund and deposits of face-to-face accounts * Investment trust fees is included in “Other commission received” * Trust fee excludes MRF

2,716 2,186

400 800 1,200 1,600 2,000 2,400 2,800 9 months 9 months

+24.3% YoY

Investment Trust Fees

(JPY million)

FY2013 FY2014

① SBI SECURITES’ 9 Months FY2014 Results

43

② Competition with the online securities companies has concluded

• I. Disparity among online securities companies in profitability,

customer base, and shares of individual stock brokerage trading value continues to widen.

• II. Reasons for widening of the disparity with other online

securities companies

• a. Achievement of high customer satisfaction due to the offering of
• verwhelmingly low trading commissions
• b. Realization of Group synergies through development of a financial

ecosystem

• c. “Winner Takes All” principle applicable to the securities industry

44

Operating Revenue

YoY change (%)

Operating Income

YoY change (%)

SBI

55,974

• 0.3

24,976 +0.3

Monex （*1）（Cons.）

36,977

• 13.3

5,465

• 58.0

Rakuten （*2）

33,027

• 5.4

14,522

• 17.1

Matsui

25,438

• 18.9

16,367

• 24.5

kabu.com

17,145

• 5.1

7,144

• 20.7

②-(i) Widening of the Disparity with Other Online Securities Companies

(Unit: JPY million)

Performance Comparison of Major Online Securities Companies (J-GAAP)

*1 From full -ear FY2012, Monex adopted IFRS, so the relevant figures above are based on IFRS. The amount of “Operating Income” is “The amount equivalent to operating income” disclosed by Monex *2 Although the figures of 9 months FY2014 disclosed by Rakuten are non-consolidated figures, the year-on-year % changes are calculated using the consolidated results of 9 months FY2013. Source: Compiled by SBIH from the information on websites of each company.

45

3.5 3.3 1.9 2.1 8.8

1 2 3 4 5 6 7 8 9

SBI Monex Rakuten Matsui kabu.com

905 925 1,744 984 3,149

1,000 2,000 3,000

SBI Rakuten Matsui Monex kabu.com

SBI SECURITIES Attains an Overwhelming Customer Base

* [Number of Accounts and Amount of Customer Asset]

Customer Accounts of 5 Major Online Securities Companies Customers’ Deposit Assets of 5 Major Online Securities Companies

(as of the end of Dec. 2014) (as of the end of Dec. 2014)

First online securities company with the number of accounts exceeding 3 million

(on June 27, 2014)

Source: Compiled by SBIH from the information on websites of each company.

(Thousand accounts) (JPY trillion)

* The figure of Rakuten is that of the end of Sept. 2014. The figure as of the end of Dec. is not disclosed.

②-(i) Widening of the Disparity with Other Online Securities Companies

46

SBI SECURITIES’ Share of Individual Stock Trading is Continuously Expanding

SBI

37.5

Rakuten

16.0

Monex

6.0

Kabu.com

9.2

Matsui

12.9

Others

18.4

SBI

39.5

Rakuten

15.8

Monex

4.7

kabu.com

10.9

Matsui

15.9

Others

13.2

Inside: 9M FY2013 Outside: 9M FY21014

34.7 15.1 10.5 7.5 6.6 25.6 36. 36.6 15. 15.4 11. 11.9 8.5 .5 6.1 .1 21. 21.5

FY2013 full- year: 35.3%

Share of Individual Stock Trading Value (%)

9M FY2014

(Apr. 2014-Dec. 2014)

(of which) Share of Individual Margin Trading Value (%)

9M FY2014

(Apr. 2014-Dec. 2014)

FY2013 full- year: 38.2%

Source: Compiled by SBI SECURITIES based on Tokyo Stock Exchange and JASDAQ materials and websites of each company * The whole individual stock trading value and individual margin trading value are the sum of 1st and 2nd section of the Tokyo and Nagoya Stock Exchange, respectively.

Inside: 9M FY2013 Outside: 9M FY21014

②-(i) Widening of the Disparity with Other Online Securities Companies

47

56.3% 52.7%

10% 20% 30% 40% 50% 60%

• Feb. 2013

May 2013

• Aug. 2013
• Nov. 2013
• Deb. 2014

May 2014

• Aug. 2014
• Nov. 2014

SBI Matsui Rakuten kabu.com

SBI SECURITIES' Overwhelming Share of the Nikkei 225 Options

Based on the disclosure of individual brokerage trading value announced by OSE. As for Jan. 2015, the figure is calculated by the amount up to the second week of Jan.

Share of individual Nikkei 225 option trading

②-(i) Widening of the Disparity with Other Online Securities Companies

48

35.45%

10% 20% 30% 40%

Dec. 2012 Apr. 2013 Aug. 2013 Dec. 2013 Apr. 2014 Aug. 2014 Dec. 2014

SBI Matsui Rakuten kabu.com 46.01%

10% 20% 30% 40% 50%

Dec. 2012 Apr. 2013 Aug. 2013 Dec. 2013 Apr. 2014 Aug. 2014 Dec. 2014

SBI Matsui Rakuten kabu.com Share of Nikkei 225 Futures "Large“ Individual Brokerage Share of Nikkei 225 Futures "Mini“ Individual Brokerage

Record high Launch of “J-NET Cross-trading”

Based on the disclosure of individual brokerage trading value announced by OSE. As for Jan. 2015, the figure is calculated by the amount up to the second week of Jan.

Record high Launch of “J-NET Cross-trading”

SBI SECURITIES’ Share of Nikkei 225 Futures Hit a Record High

Individual investor share of Nikkei 225 futures is steadily increasing. The expansion trend has accelerated since the start of the J- NET Cross-trading Service in Oct. 2014. SBI has captured an overwhelmingly high share, and set new records through the differentiation of a service that provides opportunities to trade at more favorable prices than floor trading.

②-(i) Widening of the Disparity with Other Online Securities Companies

49

2.4 4.0 6.8 8.5

2.5 5.4

4.1

9.1 3.5 4.0

0.0 5.0 10.0 15.0 SBI kabu.com Rakuten Matsui Monex*2

Left：9M FY2013 (Apr.2013-Dec.2013) Right：9M FY2014（Apr.2014-Dec.2014)

Lowest level among the major online securities companies

②-(ii) Reason of Widened Disparity: a. Providing Momentous

Overwhelmingly Low Trading Commissions

• f SBI SECURITES

(Calculated as commissions divided by stock brokerage trading value)

(Basis point)

*1 Major online securities companies refer to SBI SECURITIES, Rakuten Securities, kabu.com Securities, Monex and Matsui Securities *2 Figures of Monex are based on commission of Monex, Inc.’s commission figures Source: Compiled by SBI SECURITIES from financial results announcement materials and monthly disclosure reports of each company. Commissions are from earnings briefings.

50

Stock Exchanges (TSE etc.)

Japannext PTS [Trading hours] 08:20-16:00 (daytime) & 19:00-23：59 (night-time) SOR system automatically chooses the most favorable market and places an order

• When deals are executed on PTSs, the commission is approx. 5% cheaper than
• n the exchanges
• SBI SECURITIES' customers' investment performance will be enhanced through

this benefit

[The only market in Japan providing night-time trading]

Synergy created with SBI Japannext leads to a competitive advantage

By Leveraging Japannext PTS, Earned Higher Customer Loyalty by Significantly Lowering the Transaction Fees

[SBI SECURITIES]

(Started SOR connection from June 2011) ②-(ii) Reason of Widened Disparity: a. Providing Momentous

51

Collaboration with SBI Japannext Securities' IT Dept., that Leads to SBI SECURITIES' Significant Cost Reduction

(Consolidation of Data Centers)

Pursue to consolidate the current data centers with decentralized functions

Synergy

In the IT section, 48 persons that account for nearly 80% are highly skilled foreign staff

Data center D After consolidation Data center E

Data center A

Present

Data center B Data center C Cooperate Locations integrally operated

Company A Company B Company C

Aggregation of functions Aggregation of

• perations

[SBI SECURITIES] [SBI SECURITIES]

• Stable operation through load balancing and enhanced service

continuity in times of disaster

• Substantial cost reduction through efficiency improvement

②-(ii) Reason of Widened Disparity: b. Realization of Group Synergies

52

Synergy between SBI SECURITIES and SBI Sumishin Net Bank has become a Differentiation Factor

(SBI Hybrid Deposit) 566.4 1,050.0 1,196.5

300 500 700 900 1,100 1,300

Dec. Mar. June Sept. Dec. Mar. June Sept. Dec.

2013 2014 2012 Record high:

• Nov. 2014: JPY

1,215bn

SBI Hybrid Deposit balance increased by approx. JPY 630.1bn in the past two years from Dec. 2012

Exceeded 900,000 users in May 2014 SBI Hybrid Deposits (Automatic deposits and withdrawals of stock trading deposits) : SBI Hybrid Deposit balance can be integrated into available deposit balance for stock trading, margin trading, and actual receipt of stock purchased at SBI SECURITIES Change in SBI Hybrid Deposits

• f SBI Sumishin Net Bank

(Dec. 2012–Dec. 2014)

(JPY billion)

②-(ii) Reason of Widened Disparity: b. Realization of Group Synergies

53

Breakdown of the Customer Base (As of the end of Dec. 2014)

14,708 16,848 18,644

13,000 14,000 15,000 16,000 17,000 18,000 19,000

SBI SECURITIES

(Accounts)

3,149

SBIH InsWeb

(No. of customers)

6,673

E-LOAN

(No. of customers)

1,685

MoneyLook

(Total no. of customer registrations)

909

Morningstar Japan

(New portfolio customer registrations)

130

SBI Card

(Valid cards issued)

79

SBI Sumishin Net Bank

(Accounts)

2,200

SBI Insurance

(Total no. of contracts)

716

Autoc one

(Total no. of service users in 2014)

960

Others

(SBI Point etc.)

2,143

Total

18,644

Dec. 2012 (Thousand) (Thousand)

* Repetition customers between Group companies are counted double while it is omitting repetition in each service site when it can be recognized as a unique user. * The total number of contracts of SBI Insurance excludes continuing contracts, expiring contracts and early-withdrawal

Dec. 2013 Dec. 2014

Maximum Utilization of Rapidly Increasing Customer Base for Further Pursuit of Synergies

②-(ii) Reason of Widened Disparity: b. Realization of Group Synergies

54

The Group’s Big Data

Pursuit of Group Synergies through the Strategic Utilization of “Big Data” Derived from a Significant Customer Base

Extensive data through the Group’s approx. 18 million customers and approx. 650 million page views per month (as

• f Dec. 2014)

Establishment of “Group’s big data”

• From the first half of 2015, on an organization-

wide basis, planning the use of a common ID platform, service site and advertising base

• Through the cooperative utilization of data,

customer analysis based on action history, history, hobbies, and ideas

• Customer loyalty program utilizing SBI Point
• Organization-wide marketing strategy

cooperation to increase efficiency

Utilization of “Group’s big data”

• Providing optimized services on a one-to-one

basis

• Establishment of an organization that aggregates

personnel who utilize the Group’s data, and the sharing of each company’s expertise

• Data-driven decision making through cross-

sectional data management

• Advertisement based on statistical analysis
• Establishment of analysis platform utilizing

distributed environment (Hadoop)

Big Data held by partner companies in other industries

The SBI Group’s various services

Link IDs / Service site Action history / Attribute information SBI Point (reward points)

Actualizing aggregation and enhancement of the Group’s customer base with a focus on linking IDs, and the creation of “network value” by utilizing the Group’s big data

Analysis platform / Advertisement platform

Formation of “Bigger Data” through partnerships with external companies

②-(ii) Reason of Widened Disparity: b. Realization of Group Synergies

55

Succeeded at Attaining New Customers through NISA

(Dec. 2014)

SBI Matsui kabu.com Nomura* Daiwa*

• No. of NISA

accounts

• ca. 570,000
• ca. 80,000
• ca. 90,000 ca. 1,350,000
• ca. 640,000

* As of Nomura and Daiwa, the number of accounts are as of the end of Sept. 2014 (Source: Kinyu Keizai Shimbun)

②-(ii) Reason of Widened Disparity: c. Great Example of “Winner Takes All” Principle Applied

Despite initiating the customer acquisition process at the same time, the gap with the online peers is conspicuous

25.8

74.2

■ Persons age 20 to 49 make up 59.6% of customers opening NISA accounts (Regarding major 10 securities companies and 4 major banks, persons age over 60 make up 54%*2) ■ Active account ratio of 57.9% (Among the major 10 securities companies and 4 major banks, the ratio is 44.8%*2)

SBI SECURITIES(%) Over 25% of the number of new customers

• pening NISA

accounts, 65.9% are beginner investors

*2 The Nikkei on Jan. 20, 2015

Currently, SBI SECURITES has approx. 590,000 accounts, and deposits of JPY 234.4bn (as of Jan. 28, 2015)

12.2

87.8

Beginners *1 Investors with experience

Source: JSDA

*1: “Beginners” represent investors who opened their accounts after Apr. 2013; equivalent to SBI SECURITIES’ “New customers

Entire Securities Industry (%) New customers Existing customers

Comparison of Customer Attribute (as of the end of June 2014)

56

③ Current business strategy for the securities-related businesses

(i) Expansion of the corporate business on the basis of a retail business clearly superior to face-to-face securities companies (ii) Through an alliance between SBI SECURITIES and SBI MONEY PLAZA, strengthening the customer base and sales capacity to enhance the PO underwriting business (iii) Through an alliance between SBI SECURITIES and SBI Liquidity Market, further expanding FX trading business (iv) Through strengthening of the relationship between SBI SECURITIES and SBI Japannext, launching a trading business ~ Structuring a business foundation to compete with major face-to-face securities companies ~

57

Performance Comparison with Brick-and-mortar Securities Companies (J-GAAP)

Operating Revenue

YoY % change

Income before Income Tax

YoY % change

SBI

55,974

• 0.3

23,570 +1.8

Nomura (*)

(cons.)

1,420,583 +2.9 241,803

• 11.4

Daiwa (cons.) SMBC Nikko

(cons.)

257,541

• 6.9

69,356

• 19.4

Ichiyoshi

(cons.)

15,017

• 23.2

4,077

• 51.1

Iwai Cosmo

(cons.)

15,005

• 21.2

3,496

• 41.4

* Figures for Nomura are based on US-GAAP.

Scheduled to be announced on Jan. 30, 2015

(Unit: JPY million)

Source: Compiled by SBIH from the information on websites of each company.

58

Number of Accounts of SBI SECURITIES and Major Face-to-face Securities Companies

SBI SECURITIES is ranked No. 3 in customer base, following Nomura and Daiwa

(Based on latest data disclosed by each company)

5,211 3,642 3,149 2,575

1,000 2,000 3,000 4,000 5,000 6,000

Nomura Daiwa SBI SMBC Nikko

(Dec. 2014) (Dec. 2014) (Sept. 2014) (Sept. 2014)

(Thousand accounts)

③-(i) Strengthening Corporate Business Based on Retail Business

59

109 77 54 63 63 76 83 89 10.6 9.0 7.4 9.8 10.3 11.1 17.1 68 18.9 11.9

20.5 21.2% 9.8 19.1 17.7 11.7 14.3 13.6 16.3

20 40 60 80 100 120

FY2006 FY2008 FY2010 FY2012

• Sept. 2014

9 11 13 15 17 19 21 Individual equity holdings (a) Customer assets of 5 major online brokers (b) Online brokers' share (b/a) (JPY trillion)

Share of individual equity holdings has steadily increased along with the passage

• f time, but relationships with emerging companies will need to be strengthened

in order to expand further growth

(%)

Five Major Online Securities Companies’ Market Share in Terms of Deposit Assets

Change in the share of individual equity holdings (stock)

5 major online securities companies handle an

• verwhelming share of the flow
• f stock trades, which stands at
• ver 80%

Assets of customer accounts of the five major online securities companies is gradually increasing and totaled JPY 18.9tn, as of the end of Sept. 2014, but this represents a mere 21.2% of the total shares held by individuals in Japan

Source: Complied by SBI based on disclosed data from each company websites, and Bank of Japan “Flow of Funds” (as of the end of each period)

③-(i) Strengthening Corporate Business Based on Retail Business

60

* The figures of Nomura and Daiwa are calculated based on their 1H FY2014 results

Comparison in Earnings Sources with Major Face-to-face Securities Companies

From the perspective of competing with the major face-to-face securities companies, SBI SECURITIES must further strengthen its underwriting, sales and trading businesses

10.8 12.1 13.2 58.1 37.3 7.9 10.2 10.5 38.7 37.8 24.4 22.0 23.4 6.1 43.8 40.1 34.9 10.8 13.2 15.6 18.1 3.1 8.0 SMBC Nikko Daiwa Nomura Matsui SBI

Trading gains/loss

Operating Revenue Structure of Matsui and Face-to-face Securities Companies in 9M FY2014

Others

(%)

Commissions Financial revenues Underwriting / Sales commissions offering / Sales commissions

(Non-cons.) (Non-cons.) (Non-cons.) (Non-cons.) (cons.) ③-(i) Strengthening Corporate Business Based on Retail Business

* *

61

IPO underwriting Secondary finance M&A IR support IR, investment information IPO stock, subscriptions,

• ff-floor

distribution Securitized products FX, futures,

• ptions,

covered warrant Stocks, investment trusts, bonds Off-floor Distribution (Main broker)

Corporate business Retail business

A model of entering the wholesale business after having dominated in the retail business by leveraging low cost and an overwhelming ability to attract customers, strengths unique to online securities companies, will be decisive in competition

Expand corporate business by leveraging retails sales power and SBI Group content. Expand market share through new services and an attractive commission

• system. Broaden the

customer base even further.

Expansion of the Corporate Business on the Basis of a Retail Business Clearly Superior to Face-to-face Securities Companies

③-(i) Strengthening Corporate Business Based on Retail Business

62

Along with the maximum utilization of the advantages of an online securities company, in the physical presence of the SBI MONEY PLAZA shops where a low-cost structure is maintained, present the meritoriousness of face-to-face sales

Online broker Face-to-face broker

Strong point

• Low cost
• Overwhelming drawing power
• Overwhelming transaction

volume

• Community based
• Face-to-face sales power
• Customers can be

differentiated

Weak point

• Highly dependent on brokerage
• Low profitability due to

commission price competition and the cost of continuous system investment

• Impossible to respond to detailed

customer needs

• High cost (personnel, property)
• Weak drawing power
• Small transaction volume

SBI’s Face-to-face Securities Business, Based on the Online Securities Business Model, is a Surefire Winning Strategy

③-(i) Strengthening Corporate Business Based on Retail Business

63

Three Models that Cannot Survive Intense Competition

×Independent online securities model ×Independent face-to-face securities model ×Face-to-face model-based online securities

• Competition in commission rates and system investment requirements among internet securities

companies places continuous pressure on earnings

• Internet securities have a limit to selling products that require detailed explanation. It is not

possible to offer differentiated services to affluent customers

• The reliance on brokerage is high, which makes it difficult (except in the case of IPOs) to expand

underwriting operations

• Earnings through brokerage turnover are strongly influenced by the inroads of internet

securities companies

• With the emergence of bank-affiliated securities, the underwriting business of already

weakened face-to-face securities companies is eroding further

• Customers obtained through the face-to-face division migrate to the subsidiary internet division

where commission fees are much cheaper

• As a result, commissions from the face-to-face securities division decline, which puts pressure
• n the cost of maintaining the fleet of business offices and sales staff

Reasons are for … Depends heavily on the stock market

Invites the weakening of the retail business which is essential to the brokerage business

Cannibalism occurs

③-(i) Strengthening Corporate Business Based on Retail Business

64

Example of Failure: The Nomura Group’s Venture into Online Securities Business through JOINVEST Securities

Commenced operations as an online securities company

Nomura Holdings, Inc.

A wholly-owned subsidiary

May 2006 Since Nov. 2009

Nomura Securities

(Face-to-face) (Online)

Merged

Integrated into Nomura Securities’ “Direct Service” Failing to earn a profit, abandoned pure-play operations

• Raised stock brokerage

commissions

• Decreased the number of

investment trusts for new purchases, from 240 to 64 For “Direct Service,” Nomura Securities…

(Face-to-face) (Online) [Ordinary loss] FY2006: ca. JPY 7.1bn FY2007: ca. JPY 8.4bn FY2008: ca. JPY 6.6bn Since its establishment, it recorded cumulative

• rdinary loss of more

than JPY 22bn

Nomura Securities

Nomura Securities

③-(i) Strengthening Corporate Business Based on Retail Business

65

Post-IPO Share Turnover Ratio

(Calculated as total trading volume during the first month after listing divided by the number of publicly traded shares)

23.1 16.5 20.8 3.5

5 10 15 20 25

SBI SECURITES underwrote SBI SECURITES did not underwrite Other online brokers underwrote None of the online brokers underwrote

(Times) [255 companies in total from 2008 to Sept. 2014]

(178 companies) (77 companies) (31 companies) (46 companies) ③-(i) Strengthening Corporate Business Based on Retail Business

66

SBI SECURITES Enhances its IPO Underwriting Business and is Continuously the Industry Leader in IPO Underwriting

55 42 42 26 14 11

10 20 30 40 50 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

Company name

• No. of

cases Underwriting share (%)

SBI 55 84.6 Mizuho 45 69.2 SMBC Nikko 44 67.7 Nomura 40 61.5 Daiwa 36 55.4 Monex 33 50.8 Ichiyoshi 30 46.2 Okasan 23 35.4

3Q

Lead Managers

1 1 5 5 5

Number of IPOs Underwritten by SBI SECURITIES

Will continue to focus on IPO underwriting

Increase in the number of companies for which SBI SECURITES is a lead manager

(No. of companies) * The above figures do not include consignments. Based on listing date. The figures exclude brokerage sales and REITs. * The number of IPOs does not include issues listed on TOKYOAIM.

IPO Underwriting Ranking (9M FY2014)

65 companies were listed in 9 months FY2014

* The above IPOs represent issues underwritten in Japan only and do not include additional secondary offerings or overseas issues. * The number of underwritten issues represents both lead managed underwritings and syndicate participation. * The data was compiled by SBIH based on each company’s published information.

③-(i) Strengthening Corporate Business Based on Retail Business

67

Focus on PO Underwriting as well as IPO Underwriting

No. Name Amount (JPY bn) Share (%)

1 Nomura 378.1 27.6 2 Daiwa 291.1 21.3 3 MUFJ 180.7 13.2 4 SMBC Nikko 174.1 12.7 5 Mizuho 173.9 12.7 6 Goldman 30.7 2.2 7 Citi Group 27.0 2.0 8 Tokai Tokyo 17.2 1.3 9 Okasan 13.1 1.0 ： 19 SBI 2.5 0.2

No. Name Amount (JPY bn) Share (%)

1 Nomura 327.7 37.1 2 Daiwa 147.9 16.7 3 SMBC Nikko 132.2 15.0 4 MUFJ 120.6 13.6 5 Mizuho 115.2 13.0 9 SBI 4.7 0.5

In calendar 2014, rose in ranking and won 2 lead manager positions

PO Underwriting Amount Ranking

・ ・

Major Leader case 1 S TRUST  Launch: July 25  Mothers Market  TSE 1st  No. of shares offered: 1,150,000 shares  Amount financed:

• approx. JPY 0.7bn

 Acquired 1,545 shareholders via SBI SECURITIES  Launch: Nov. 7  Mothers Market  TSE 1st  No. of shares offered: 2,931,000 shares  Amount financed:

• approx. JPY 4.9bn

 Acquired 1,829 shareholders via SBI SECURITIES

PO Underwriting Ranking

* Excludes the amount for overseas issues and REITs * Excludes the amount for over allotment

No. Name

• No. of

cases

1 Nomura 32 2 Daiwa 22 3 SMBC Nikko 17 4 Mizuho 15 5 MUFJ 8 6 SBI 2 6 Ichiyoshi 2 [2013] [2014] [2014]

PO underwriting amount 2013 2014

Ranking 19  9 Amount JPY 2.5bn  JPY 4.7bn

* The data was compiled by SBI SECURITIES based on each company’s published information

* Excludes the amount for overseas issues and REITs * Includes the amount for over allotment

Major Leader case 2 Vector

③-(i) Strengthening Corporate Business Based on Retail Business

68

2014 EB Sales Amount Ranking (Jan.-Dec. 2014)

No. Name Amount (JPY bn) Share (%)

1 Okasan 129.2 23.6 2 Nomura 96.3 17.6 3 Tokai Tokyo 95.5 17.5 4 IwaiCosmo 40.1 7.3 5 SMBC Friend 36.6 6.7 6 Mizuho 35.9 6.6 7 SBI 27.6 5.1 8 Naito 18.2 3.3 9 Imamura 14.0 2.6

SBI SECURITIES' Bond Sales Increasing Steadily (i)

No. Name Amount (JPY bn) Share (%)

1 Mizuho 2,175.6 25.6 2 Mitsubishi UFJ 1,586.2 18.6 3 Nomura 1,572.2 18.5 4 SMFG 1,377.0 16.2 5 Daiwa 1,275.2 15.0 6 Goldman 100.8 1.2 7 Merrill Lynch 90.2 1.1 11 SBI * 42.9 0.8

2014 Yen Bond Underwriting Amount Ranking (Jan.-Dec. 2014) * SBI SECURITIES’ underwriting amount would be JPY 67.5bn, if the amount for corporate bonds issued by SoftBank in Feb. 2015 were included

… … … …

Source: Thomson Reuters

[2013] No.12: SBI - JPY 29.5bn (share 0.3%)

Source: Bloomberg

[2013] No.8: SBI - JPY 21.0bn (share 3.1%)

③-(i) Strengthening Corporate Business Based on Retail Business

69

29,090 29,574 42,900

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2012 2013 2014

380 20,519 32,136

5,000 10,000 15,000 20,000 25,000 30,000 2012 2013 2014 Yen Bond Underwriting Amount (calendar year) EB Underwriting Amount (calendar year)

Sales amount of Exchangeable Bonds increased from JPY 380m in 2012 to JPY 32.14bn in 2014, an 85-fold increase

(JPY million)

* Includes non-public offering of EB

By maximally utilizing SBI MONEY PLAZA's customer base and sales network, a further expansion of the PO underwriting business may be implemented

(JPY million) ③-(i) Strengthening Corporate Business Based on Retail Business

SBI SECURITIES' Bond Sales Increasing Steadily (ii)

70

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Solar power- related, etc. Insurance Housing loans Securities

871 1,194

200 400 600 800 1,000 1,200 1,400

9 Months FY2013 9 Months FY2014

SBI MONEY PLAZA Steadily Expands Its Business

Operating income increased 37.2% YoY, owing to the diversification

• f revenue sources, along with an expansion of the customer base

Operating Revenue Operating Income

(JPY million) (JPY million)

9 Months FY2013 9 Months FY2014

3,125 3,510

③-(ii) Cooperation with SBI MONEY PLAZA:

+37.2% YoY

71

354.1 402.2 440.3 497.4 100 200 300 400 500

Sep 2013 Mar 2014 Sep 2014 Dec 2014

61,254 63,106 65,014 66,124 60,000 62,000 64,000 66,000

Sep 2013 Mar 2014 Sep 2014 Dec 2014

Customers’ Deposit Assets Number of Accounts

(JPY billion) (accounts)

• Number of SBI MONEY PLAZA shops totaled 402 shops as of Dec. 31, 2014
• With the intention of establishing 500 shops nationwide, planning to open stores in

prime major city locations, as well as considering the opening of shops within regional bank premises

• Also, through the elimination and consolidation of the existing shops, enhancing

sales activities and the "quality" of existing shops

Customer Base Rapidly Increasing

③-(ii) Cooperation with SBI MONEY PLAZA:

72

76% 25% 24% 75% 0% 20% 40% 60% 80% 100%

• No. of accounts

Commisions JPY 30m or more Less than JPY 30m

SBI MONEY PLAZA: Share by Registered Financial Assets

(Securities business, 9 Months FY2014)

75% of commission revenues are coming from the top 24%

• f clients

Initiatives to Strengthen Businesses Targeting High-net-worth Individuals SBI MONEY PLAZA meets needs that cannot be completely met by online services

• nly, such as needs for consultation about investments, inheritance, and
• donations. It is working to attract customers from Group companies through

seminars and individual consultation.

SBI MONEY PLAZA Strengthens Services for High-net-worth Individuals in Collaboration with Group Companies

③-(ii) Cooperation with SBI MONEY PLAZA:

73

Thorough Development of the High-net-worth Customer Base through the Utilization of Intermediaries such as Tax Attorneys and Accountants

Support selling financial instruments and business building

Intermediaries

(Customers that consented to broker's request to refer personal information to third parties)

Refer customers Provide financial instruments

Synergy

[SBI MONEY PLAZA] [SBI SECURITIES]

• SBI MONEY PLAZA will thoroughly develop high-net-worth

customers and refer to SBI SECURITIES, by approaching high- net-worth executives and physicians in private practice who are clients of tax attorneys and accounts

Executives, physicians, etc.

Tax attorneys office Accounting office

③-(ii) Cooperation with SBI MONEY PLAZA:

74

In Cooperation with SBI MONEY PLAZA, Focus on the Strengthening of the Customer Base and Sales Force

Synergy

Individual investors

Focus on high-net-worth customer business

High-net-worth customers [SBI SECURITIES] [SBI MONEY PLAZA]

Meet client needs for business succession and inheritance/donation services, and strengthen businesses targeting high-net-worth individuals. Through close collaboration with SBI MONEY PLAZA, acquisition of additional high-net-worth customers at SBI SECURITIES will become possible, and the diversification of customer base will proceed Maximum utilization of SBI MONEY PLAZA’s sales network will increase the ability to sell products offered by SBI SECURITIES, and as a result, SBI SECURITIES underwriting capability will be enhanced. This will lead to expansion of corporate businesses such as public offering (PO) underwriting, an area targeted for future emphasis. ③-(ii) Cooperation with SBI MONEY PLAZA:

75

Example of Customer Expansion at SBI SECURITIES through Collaboration with SBI MONEY PLAZA and Product Diversification

Structured bonds

Planning to originate structured bonds, which are currently purchased from third parties

• Coupon

High

• Profitability

High School corporations Religious corporations Owners of public companies Medical corporations

—Sale of structured bonds originated at SBI SECURITIES, through SBI MONEY PLAZA

[SBI SECURITIES] [SBI MONEY PLAZA]

③-(ii) Cooperation with SBI MONEY PLAZA:

76

~ Unlike SBI SECURITIES, the major face-to-face securities companies do not provide an integrated stock and FX trading platform ~

Through an Alliance of SBI SECURITIES and SBI Liquidity Market, FX Trading Business Expanded

718 921 1,594 1,126 846 1,308 1,369 1,234 865 1,168 920

500 1,000 1,500 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 20 40 60 80 100 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q SBI Matsui Monex kabu.com (JPY trillion)

Change in FX Trading Value

FY2014 FY2013 FY2012

Recorded JPY 3,360m for 9 months FY2014

[FX-related gain of 3Q FY2014] SBI JPY 3,360m Matsui JPY 274m Monex Group JPY 2,387m kabu.com JPY 1,046m

③-(iii) Cooperation between SBI SECURITIES and SBI Liquidity Market:

As an integrated service, SBI SECURITIES' FX trading provides a share certificate collateral service, that currently accounts for approx. 7% of the total customer assets related to FX trading

FX-related Gain of SBI SECURITIES

FY2014 FY2013 FY2012

(JPY million)

77

The SBI Group’s (SBI SECURITIES, SBI FXTRADE and SBI Sumishin Net Bank) Total Number of Accounts and Customer Deposit Assets are the Largest in the OTC FX Industry

Changes in Deposit Assets among 8 major FX Trading Companies （Sept. 2013 - Dec. 2014） 50 100 150

Sept. Nov. Jan. Mar. May July Sept. Nov. 2013 2014

SBI Group

GMO CLICK Gaitame.com DMM.com MONEY SQUARE JAPAN MONEY PARTNERS YJFX

Number of FX Trading Accounts (as of the end of Dec.)

No. Company name

Number of accounts

1 SBI Group

530,461

2 DMM.com

421,319

3 Gaitame.com

386,646

4 GMO CLICK

378,872

5 YJFX

304,693

6 MONEY PARTNERS

251,189

7 Traders Securities

239,337

8 Hirose FX

176,878

9 FX PRIME by GMO Corporation

155,391

10 Central Tanshi FX

152,094

11 MONEY SQUARE JAPAN

79,303

12 Ueda Harlow

52,342

Other (1 company)

57,261 Total 3,185,786

(JPY billion)

Source: Yano Research “Monthly Research on 16 Major FX Trading Companies FX PRIME by GMO Corporation

③-(iii) Cooperation between SBI SECURITIES and SBI Liquidity Market:

Dec.

78

Comparison of Operating Revenue among Listed Pure-play FX Trading Services Providers (9 Months FY2014・J-GAAP)

7,352 3,962 3,891 2,449 9,342 3,555 3,755 1,822 2,000 4,000 6,000 8,000 10,000

SBI LM MONEY SQUARE JAPAN Money Partners FX Prime by GMO 9M FY2013(Apr.-Dec.2013) 9M FY2014(Apr.-Dec.2014)

• 10.3%

YoY

+27.1% YoY

• 3.5%

YoY

• 25.6%

YoY

(QE) (QE) (JPY million)

Source: Compiled by SBIH from the information on websites of each company.

③-(iii) Cooperation between SBI SECURITIES and SBI Liquidity Market:

79

Through Strengthening of the Relationship between SBI SECURITIES and SBI Japannext, Launching a Trading Business

Synergy

Example of new services

Launch of J-NET Cross-trading Service for futures and options trading

SBI SECURITIES’ customer

Order

Reviews whether order matching is possible Success in matching orders Failure to match orders

OSE

J-NET

(off-hour market)

Floor trading

Provision of opportunities to trade at more favorable prices than floor trading by utilizing the J-NET (off-hours market) trading system for Nikkei 225 Futures and Nikkei 225 mini (beginning Oct. 14, 2014)

First-ever in Japan!!

* Compiled by SBIH as of Jan. 7, 2015

[SBI SECURITIES]

③-(iv) Cooperation between SBI SECURITIES and SBI Japannext:

[SBI SECURITIES]

80

J-NET Cross-trading Service

 Oct. 14, 2014 start of J-NET Cross-trading Service Provision of opportunities to trade Nikkei 225 futures (large/mini) at the same prices or more favorable prices than floor trading on the Osaka Exchange  Reduced futures trading commissions campaign being conducted since Dec. 30 to increase awareness and promote use  Addition of TOPIX futures (large/mini) and JPX Nikkei 400 futures since Jan. 13  As a second campaign, planned offering of Nikkei 225 futures J-NET trading commissions of JPY 250 for large contracts and JPY 25 for mini contracts beginning on the night of Jan. 30

① J-NET Cross Transactions - Selected ratios' trend (active accounts) ② J-NET Cross Executed Contracts Trend

5,000 10,000 15,000 20,000 25,000 30,000 500 1,000 1,500 2,000 2,500 3,000

Nov.17, 2014Dec.01, 2014Dec.15, 2014Dec.29, 2014Jan.12, 2015

Large Mini

60% 70% 80% 90%

Nov.17, 2014 Dec.01, 2014 Dec.15, 2014 Dec.29, 2014 Jan.12, 2015 Large Mini Large: 80% Mini:77% Large:82% Mini:78% Large:83% Mini:77% Large:1,414 Mini:15,194 Large:1,080 Mini:11,879 Large:834 Mini:10,111

* The percentage figures presented above in the chart are the average during the period

③-(iv) Cooperation between SBI SECURITIES and SBI Japannext:

81

(2) Insurance-related Businesses

① SBI Insurance achieved quarterly profitability in 1Q and 3Q, and endeavoring to become a profit contributing entity in the near term ② Both of the small-amount, short-term insurance companies have grown steadily ③ Current business strategy for the insurance-related businesses

82

① SBI Insurance achieved quarterly profitability in 1Q and 3Q, and endeavoring to become a profit contributing entity in the near term

83

Achieved Quarterly Profitability in Q1 and Q3, and endeavoring to become a profit contributing entity in the near term

~There is a Possibility of Full-year Profitability in this Fiscal Year~

FY2013 FY2014 1Q (Apr. – June)

• 0.7

0.1

2Q (July – Sept.)

• 1.1
• 0.4

3Q (Oct. – Dec.)

• 0.7

0.1

4Q (Jan. – Mar.)

• 1.4

―

Profitability achieved in 1Q and 3Q and there is a possibility of full-year profitability in FY2014 - a year ahead

• f plan

SBI Insurance Profit before Income Tax Expense (IFRS) (Unit: JPY billion)

[Since 2011] Executed various measures to increase profitability including drastic overhaul

• f reinsurance and outsourcing

[FY2015] Targeting full-year profitability in FY2015 on an IFRS consolidated base [1Q FY2014] Achieved its first quarterly profitability

①SBI Insurance:

84

Combined Ratio Continued at Below 100%, and is in a Declining Trend

FY2012 FY2013 9M FY2014

Combined ratio*1

(%)

103.1 98.8 95.2

Net operating expenses ratio*2 (%)

33.4 26.4 22.6

(EOM)

• Mar. 2013
• Mar. 2014
• Dec. 2014

E/B loss ratio*3 (%)

78.9 75.5 68.0

*1 Combined ratio: An index reflecting profitability of nonlife insurance companies. The ratio of the sum of insurance premium payment and expense to insurance premium income. *2 Net operating expenses ratio (%) = (Operating and general administrative expenses + Agency commission and brokerage) / Net premium Income X 100 *3 E/B loss ratio: A loss ratio calculated on the basis of premiums earned during the past year that indicates the occurrence of more substantive losses E/B loss ratio (%) = (Premiums paid during the past year + Year-on-year change in reserve for outstanding claims) / Premium income during the past year x 100 [reference] Net loss ratio (%) = (Net claims paid + Loss adjustment expenses) / Net premium Income X 100

①SBI Insurance:

85

3 5 8 10

[Bicycle Accident Compensation Treaty] (Launched in Apr. 2013)

40 80 120

Increased dramatically through cooperation with SBI MONEY PLAZA and Financial Agency,

• Inc. (a Group’s portfolio

company) Strong performance, especially from addition at the time

• f policy renewal

(thousand) June Dec. June Dec. 2013 2014

9,660

• Approx. 110

thousand

Dec. 2012 Dec. 2013 Dec. 2014

+116% YoY +186% YoY

[Cancer Insurance] (Launched in Aug. 2012)

(thousand) (EOM OM) (EOM OM)

Number of Contracts (Cancer insurance ) Number of Contracts (Auto insurance with bicycle specified policy)

Auto Insurance with Bicycle Specified Policy and Cancer Insurance Increased Dramatically

①SBI Insurance:

86

② Both of the small-amount, short-term insurance companies have grown steadily

87

② SBI SSI, SBI IKIIKI SSI:

11,110 11,857 13,046

8,000 10,000 12,000 14,000

30,522 32,221 36,734

25,000 30,000 35,000 40,000

Number of Contracts of the Small-amount, Short- term Insurance Companies

+14% YoY +10% YoY

Acquired (Mar. 2013) [SBI SSI] (Acquired in Mar. 2012) [Earthquake indemnity insurance] [Death insurance, Medical insurance]

(Number of Contracts)

[SBI IKIIKI SSI] (Acquired in Mar. 2013)

(Number of Contracts)

Dec. 2012 Dec. 2013 Dec. 2014 (EOM) Dec. 2012 Dec. 2013 Dec. 2014 (EOM)

88

SBI IKIIKI SSI 2,665 LIFENET 7,086 AXA Direct Life 2,611

3,000 6,000 9,000 12,000 15,000 18,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

SBI IKIIKI SSI LIFENET AXA Direct Life

Since the Group’s Acquisition of Shares, SBI IKIIKI SSI Continues to Grow

(Contracts) FY2011 FY2012 FY2013 FY2014

Accelerated conversion to

• nline operations since the

SBI Group’s share acquisition in Mar. 2013 Furthermore, rapid expansion due to factors including utilization of customer bases and other SBI Group synergies and the opening of new sales channels

Quarterly Number of Newly Acquired Contracts

Acquired by the group in March, 2013 ▼

Source: Disclosure from each company

② SBI IKIIKI SSI:

89

③ Current business strategy for the insurance- related businesses

(i) SBI Insurance’s expansion of product offerings (ii) Reentry into the Life Insurance Business (iii)Pursue for Synergies between insurance-related business and the Group companies (iv)Restructure and reinforce the Group's asset management division to sophisticate its ability (v) Considering the establishment of an insurance holding company

90

SBI Insurance's profitability is in sight, centering on its core auto and cancer insurance products, and is now in the process of considering fire insurance as a new core product

SBI Insurance’s Expansion of Product Offerings

Synergy

③-(i) SBI Insurance’s expansion of product offerings

Fire insurance (under consideration)

Upon the launch of a fire insurance product, synergies with SBI Sumishin Net Bank and SBI Mortgage, both of which deal in housing loans, will be thoroughly pursued

Results of housing loans (Oct. 2007- Dec. 2014) Total amount ： JPY 2,081.1bn Total number ： 86,264 Number of newly acquired (Apr.-Dec. 2014) ： 11,856

(SBI Group’s shareholding*1: Approx.11%)

Results of housing loans (Jul. 2001 – Dec. 2014) Total amount ： JPY 2,707.6bn Total number ： 109,866 *2 Number of newly acquired (Apr.-Dec. 2014) ： 12,435 *2

*1 Ratio of voting rights for CSM Holdings Co., Ltd., the holding company of SBI Mortgage. SBI Group's shareholding percentage corresponds to a total percentage based on the IFRS criteria for subsidiary companies and subsidiary funds

• f the Group. (As of the end of Dec. 2014)

*2 The number of loans backed, excluding package loans and loans for expenses related to housing acquisition

[SBI MONEY PLAZA]

91

• Japanese arm of Prudential plc
• Ceased writing new policies from Feb. 2010, and has since dedicated their

resources to support and conserve in-force life policies

• Provides broad types of insurances such as term life insurance, whole life

insurance, medical insurance and individual variable annuity insurance

• Holds more than 120 thousand in-force life policies as of Sept. 30, 2014
• Its solvency margin ratio is 1,130.5% (as of Sept. 30, 2014), which is trustworthy for

their payment ability

PCA Life Japan

③-(ii) Reentry into the life insurance business

Reentry into the Life Insurance Business

Obtained approval of the Insurance Major Shareholder from the Financial Services Agency on Jan. 26, 2015, and plan to acquire all outstanding shares of PCA Life Japan on Feb. 5, 2015.

• USD 68m to be paid on the share transfer execution date

(Since nearly all of the funds for compensation have been held in US dollars for a long time, the impact of the recent depreciation of yen is limited.)

• The total transfer amount will be a minimum of USD 68m (the amount to be paid on the share

transfer execution date) and a maximum of USD 85m. JPY 1,987m (fixed at an exchange rate agreed with the seller), equivalent to the difference of USD 17m, will be paid only in the event that the state of progress of PCA LIFE Japan’s business satisfies certain conditions agreed with the seller.

92

FY2010 FY2011 FY2012 FY2013

Ordinary Revenue * 30,240 32,363 30,828 33,530 Net Income 775 2,147 4,088 4,578

Current Status of PCA Life Japan

[Business Performance]

(JPY million)

*equivalent to sales in ordinary operating company

PCA Life Japan has ceased writing new policies from Feb. 2010

161.5 21.2 12.2 28.3

50 100 150 200 PCA Life Japan LIFENET INSURANCE AXA Direct Life Japan Rakuten Life Insurance

Total Assets

[Comparison of ordinary income and total assets with other companies (FY2013) ]

Source: Compiled by SBIH from the information on websites of each company.

(JPY billion)

4.94

• 2.26
• 3.61

1.31

• 5

5 PCA Life Japan LIFENET INSURANCE AXA Direct Life Japan Rakuten Life Japan

Ordinary Income

(JPY billion)

③-(ii) Reentry into the life insurance business

93

Thorough Pursuit of Synergies between Insurance-related Businesses and Each Group Company Synergy

SBI MONEY PLAZA

：

SBI Life Insurance (tentative)

Provide each other’s insurance product

Synergy

Maximally utilize the Group synergies, such as group customer base and marketing channels, to expand the business scale of the insurance-related businesses

Financial Agency Inc. (Shares*: 34.9%) NEWTON FINANCIAL CONSULTING (Shares*: 20.0%)

Insurance Shop Call center

Synergy Synergy

③-(iii) Pursuit Group synergies

Website for comparison Agency within the SBI Group

[Face-to-face channel] [Internet channel]

Insurance related businesses SBI Holdings InsWeb Mitsubachihoken Group (Shares*: 25.0%)

SBI SECURITIES SBI SSI SBI IKIIKI SSI

* Shares: SBI's shareholding percentage corresponds to a total percentage based on the IFRS criteria for subsidiary companies and subsidiary funds of the Group. (As of Dec. 31, 2014)

94

Insurance-related Businesses

SBI Insurance, SBI IKIIKI SSI,

SBI Life Insurance (tentative)

Synergy

Insurance Policyholders

Contribute to health maintenance and improvement Decrease in insurance claims

Synergy of 5-ALA Related Business and Insurance-related Businesses

As the 5-ALA Related Business contributes to the health of the insurance policyholders , the insurance companies may reduce insurance payouts. Additionally, SBI will be able to create a possible win-win situation for both policyholders and the SBI Group SBI Pharmaceuticals, SBI ALApromo

③-(iii) Pursuit Group synergies

95

Owing to the Reentry into the Life Insurance Business, the AUM will Dramatically Increase, So the Group's Asset Management Division will be Restructured and Reinforced to Form a Sophisticated Asset Management Division [Asset Management Division of the SBI Group]

Restructured and reinforced to form a sophisticated Asset Management Division

③-(iv) Restructure and reinforce the Group's asset management division to sophisticate its ability Investment in unlisted and listed companies Alternative investment Equity and real estate investment Investment management Investment adviser

Overseas financial institution

Overseas financial products

96

The New Asset Management Division will Utilize Multiple Asset Types to Handle Various Investment Policies

Domestic Equity Overseas Bond Derivatives

Form a sophisticated asset management group that can handle diversified asset management policies

Domestic Bond

Non-life Insurance Life Insurance Funds managed by SBI Asset Management

Make a differentiation from competing companies through raised asset management performance Asset management which seek high returns Overseas Equity Private Equity Real Estate Cash(including foreign currency)

Restructured and reinforced Asset Management Division

Asset types

③-(iv) Restructure and reinforce the Group's asset management division to sophisticate its ability

97

• Efficient use of insurance business

related resources, such as asset management, risk management, information, know-how, and human resources

• Strengthen cooperation between

insurance companies, and create related synergies

• Along with the expansion in

business scope, diversification of financing methods to raise further capital

SBI Life Insurance (tentative) Additionally, for the involved companies' risk hedging purposes and the optimization of the corresponding risk capital, considering a foray into the reinsurance business

③-(v) Considering the Establishment of an Insurance Holding Company

[ SBI SSI ] [ SBI IKIIKI SSI ]

With the insurance-related business, the establishment of a holding company that aggregates and reorganizes the related business to enhance efficiency and maximize Group synergies, may be considered

Considering the Establishment of an Insurance Holding Company

98

(3) Banking-related Businesses

① At SBI Sumishin Net Bank, as of the end of Dec. 2014, customer accounts numbered approx. 2.2 million, and deposits totaled over JPY 3.5tn, and the business base continues to steadily expand. Diversification of the asset management methods has progressed, along with the substantive growth in deposits

(9 months FY2014 financial results announcement is scheduled on Jan. 30, 2015)

② The overseas banking-related business continues to steadily expand ③ Current business strategy for the banking-related businesses (ⅰ) Endeavoring to improve profitability through the thorough pursuit of synergies between the SBI Group companies (ii) Based on the accumulated know-how and experience in the banking-related business garnered to this day, forming a support system for the improvement in the earnings capacity

• f the regional banks

99

① At SBI Sumishin Net Bank, as of the end of Dec. 2014, customer accounts numbered approx. 2.2 million, and deposits totaled over JPY 3.5tn, and the business base continues to steadily expand. Diversification of the asset management methods has progressed, along with the substantive growth in deposits

(9 months FY2014 financial results announcement is scheduled

• n Jan. 30, 2015)

100

9M FY2014 financial results announcement is scheduled on Jan. 30, 2015

To prepare for rapid changes in the market environment, will consider the appropriate flexible sales of securities held

9M FY2014 financial results： scheduled on

• Jan. 30, 2015
• 4,721
• 3,687

2,306 3,663 5,793 7,903 11,731 7,485

• 5,000
• 3,000
• 1,000

1,000 3,000 5,000 7,000 9,000 11,000 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 (+27.6% YoY)

1H 1H

5,864

2H

5,867

SBI Sumishin Net Bank Steadily Expands its Ordinary Income

Change in Ordinary Income after Start of Operations

* Consolidated since FY2009; J-GAAP (JPY million)

Start of

• perations

(Sept. 2007)

Achieved a single year profit Achieved a single month profit for the first time in Jan. 2009 Achieved a single quarter profit for the first time in 4Q FY2008 ① SBI Sumishin Net Bank:

101

3,394.6 3,541.7 3,326.4 3,076.7

2,500 2,700 2,900 3,100 3,300 3,500 Mar. June Sept. Dec.

3,541.7 2,561.0 1,824.7 1,182.8 662.1 578.8

1,000 2,000 3,000

Sony Bank Rakuten Jibun

2014

(Dec.) (Sept.) (Sept.) (Dec.) (Sept.) (Dec.)

Deposit Balance Exceeded JPY 3.5tn

① SBI Sumishin Net Bank:

Number of accounts: 2,199,615 / Deposits: JPY 3,541.7bn

(as of the end of Dec. 2014)

Change in Deposits Deposits of 6 Internet Banks

(Based on latest data disclosed by each company)

Source: Compiled by SBIH from the information

• n websites of each company.

(JPY billion) (JPY billion)

* Amounts are rounded to the nearest JPY 100 million

SBI Sumishin Daiwa Next The Japan Net

102

200 400 600 800 1,000 1,200 1,400 1,600

Mar. Mar. Mar. Mar. Mar. Mar. Mar. Dec.

Diversification of Loans with Deposits Accumulating

JPY 1,728.5bn (as of the end of Dec. 2014)

Change in Balance of Housing Loans *1

(Mar. 2008 – Dec. 2014)

*1 Deducts repayments from the cumulative total of new loans. Includes housing loans extended as a banking agency of Sumitomo Mitsui Trust Bank

(JPY billion)

Fastest among Internet banks

Cumulative total of housing loans exceeded JPY 2.1tn

(as of Jan. 29, 2015)

(*2) *2 Cumulative total of new loans

① Housing loans processed directly by SBI Sumishin Net Bank

• Via alliance with real estate

companies (from Sept. 2007)

• “Mr. Housing Loan” (from Nov. 2013)

② Banking Agency Business for Sumitomo Mitsui Trust Bank

(from Jan. 2012)

SBI Sumishin Net Bank’s housing loans business: Owing to the increase in new loans for “Mr. Housing Loan,” the balance of new housing loans for ① of 9 Months FY2014 increased 109.9% YoY

(EOM)

2008 2009 2010 2011 2012 2013 2014

① SBI Sumishin Net Bank:

103

SBI Sumishin Net Bank Planning a Full-fledged Entry into the Credit Card Business

20 40 60

Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec

Changes in the Balance of Card Loans

(Sept. 2010-Dec. 2014)

(billion)

68.6bn (Dec. 31, 2014)

(End of month) 2010 2011 2012 2013 2014

Revised the credit ceiling and interest rates in July 2014

Other asset management lineup:

Specific purpose loans

(as of the end of Dec. 2014)

Balance of loans increased 2.9 times YoY

Service launched from May 2013

Going forward, planning a full- fledged entry into the credit card business, for the creation of new synergies SBI Sumishin Net Bank steadily accumulates the balance of specific purpose loans in addition to card loans

① SBI Sumishin Net Bank:

104

② Overseas banking-related business steadily expanding

105

0.84 0.32 1.19 0.54 1.48 0.57

Ordinary Revenue Net Income

FY2010 FY2011 FY2012 FY2013 FY2014 （QE） Total assets

9.4 12.0 14.8 24.5 34.9

Deposits

4.7 7.1 9.5 18.6 21.8

Loans

3.5 5.1 8.2 14.3 19.8  Invested in Phnom Penh Commercial Bank when it opened in Sept. 2008  Operates 10 branches throughout the country: 8 branches are in Phnom Penh, one branch is in Siem Reap and another in Battambang. SBI Group’s shareholding, including dilutive shares：91.0%

Overseas Banking-related Business is also Steadily Expanding (Example 1)

② Overseas Banking-related Business

Cambodia: Phnom Penh Commercial Bank

(SBI Group’s shareholding：47.6%) *As of the end of Dec. 2014 [Financial results for 3 fiscal years]

Unit: JPY billion * Converted at USD 1 = JPY 117.85

Unit: JPY billion

* SBI's shareholding percentage corresponds to a total percentage based on the IFRS criteria for subsidiary companies and subsidiary funds of the Group

FY2012 FY2013 FY2014 (QE)

106

0.64 2.10 2.95 Net Income

Vietnam: TPBank

(SBI Group’s shareholding：19.9%) *As of the end of Dec. 2014

Unit: JPY billion

[Financial results for 3 fiscal years] FY2012 FY2013 FY2014 (QE)

Unit: JPY billion

FY2012 FY2013 FY2014 (QE)

Total assets

83.2 176.5 283.3

Deposits

51.0 78.8 118.9

Loans

32.9 64.9 107.7

* SBI's shareholding percentage corresponds to a total percentage based on the IFRS criteria for subsidiary companies and subsidiary funds of the Group

Acquired shares in Aug. 2009 Operates 38 branches throughout the country, including the central branch in Hanoi

* Converted at VND 1 = JPY 0.0055

Overseas Banking-related Business is also Steadily Expanding (Example 2)

② Overseas Banking-related Business

107

③ Current business strategy for the banking-related businesses

(ⅰ) Endeavoring to improve profitability through the thorough pursuit of synergies between the SBI Group companies (ii) Based on the accumulated know-how and experience in the banking-related business garnered to this day, forming a support system for the improvement in the earnings capacity

• f the regional banks

108

Endeavoring to Improve Profitability through the Thorough Pursuit of Synergies between the SBI Group Companies

Banking

Supporting business

Insurance

Supporting business

Securities

Supporting business

③-(ⅰ) Aggressive pursuing between SBI Group companies

Synergy Synergy Synergy

Securities, insurance, housing loans, solar power-related, tax- saving, ordinary deposits, term deposits (under consideration)...

[Making maximal use of SBI’s financial ecosystem]

SBI Life Ins. (tentative)

[SBI IKIIKI SSI] [SBI SSI] [SBI insurance]

[SBI SECURITIES] [SBI Sumishin Net Bank] [SBI MONEY PLAZA]

109

Building on the past track record of having established the former Suruga Bank SOFTBANK Branch, planning to establish "SBI MONEY PLAZA Branch" at various regional financial institutions, such as at regional banks, etc.

Forming a New Support System to Improve the Earnings Capacity of the Regional Banks (Example 1)

• SBI MONEY PLAZA, by opening branches at various regional financial institutions, will

position itself to reach new customers and earn commission fees

• On the other hand, the regional financial institutions' own product offering will be

supplemented by SBI MONEY PLAZA's broad product offerings, leading to a heightened satisfaction per customer visit

• Also, by SBI MONEY PLAZA becoming a bank agent, regional financial institutions can

reach customers on a nationwide basis through the SBI MONEY PLAZA shops

• SBIH will hold a seminar for regional financial institutions in Feb. 2015

Regional Bank

Branch A Branch B SBI MONEY PLAZA Branch

Securities

(Stocks, Investment trusts, etc.)

Housing Loans

Solar Power- related Products FXs Deposits, etc.

(To be launched)

Insurance

(Life, Non-life, Medical, etc.)

Tax-saving Products

(NISA etc.)

…

[SBI MONEY PLAZA's offerings] [SBI MONEY PLAZA] ③-(ii) Support regional banks to better their earning capacity by SBI Group

110 Regional bank A Shinkin bank A Securities company A Regional bank B

FUND INDEX

Asset management company Asset management company Asset management company Asset management company

Talk movie to fund manager Investment report

Customers Customers Customers Customers Sales Companies

Tablet apps provided by Morningstar Japan:

Morningstar Japan provides tablet apps for investment information with an emphasis on investment trusts. As a powerful tool for selling investment trusts, it was incorporated into 13,937 tablets, at 46 companies focused on investment trust sales. Going forward, the company is considering providing MoneyLook, as well as a transaction order function to SBI SECURITIES on the app, to create added value as a comprehensive asset management and sales tool.

Tablet Apps (Platform covering 46 companies,

• approx. 14,000 tablets)

the No.1 account aggregation software in terms of the number of users and registered financial institutions

Forming a New Support System to Improve the Earnings Capacity of the Regional Banks (Example 2)

③-(ii) Support regional banks to better their earning capacity by SBI Group

111

13,937 tablets 46 companies 10 20 30 40 50 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Jun 2011 Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013 Jun 2014 Dec 2014 Tablets Companies

<Details> Banks, regional banks, shinkin banks 35 companies Securities companies (including agencies) 8 companies Asset management companies 3 companies Total 46 companies

Provided 13,937 tablets to 46 companies

(as of Dec. 31, 2014)

(Unit: Tablets) (Unit: Companies)

Number of companies adopting Morningstar Japan’s tablet apps and total number of tablets provided Number of Morningstar Japan’s tablet apps provided both in terms of companies and tablets increasing steadily

③-(ii) Support regional banks to better their earning capacity by SBI Group

Forming a New Support System to Improve the Earnings Capacity of the Regional Banks (Example 2)

112

• 3. Transition of 5-ALA related businesses

from the preparation phase to the monetization phase

(1) Total of 20 patents obtained by SBI Pharmaceuticals (2) Progress in 5-ALA related medical research in various fields (3) Conclusion of a patent licensing agreement with Cosmo Oil and development of an integrated system extending from product development to production and sales (4) 5-ALA Business progressing overseas in Bahrain and China (5) Future business strategy for the Biotechnology-related Business

113

Patents Held by SBI Pharmaceuticals (Total of 20 Patents)

The name of the invention Registration date Co-applicants Composition for peeling June 15, 2007 Single application External preparation for the skin July 27, 2007 Single application Antioxidation function improver

• Sept. 2, 2011

Cosmo Oil Health function improver

• Sept. 2, 2011

Cosmo Oil Immune function improver

• Sept. 2, 2011

Cosmo Oil Tumor diagnostic agent July 13, 2012 Single application Mitochondrial damage brain disorder treatment and diagnostic agent

• Oct. 5, 2012

Single application Urinary tract tumor determination system

• Mar. 22, 2013

Kochi University Photolesion alleviator June 21, 2013 Single application Automatic tumor identification device and automatic tumor location identification method

• Feb. 7, 2014

Single application Bladder cancer detection method

• Feb. 14, 2014

Kochi University Urothelial cancer detection method

• Feb. 21, 2014

Kochi University Male infertility treatment

• Mar. 14, 2014

Single application Cancer thermotherapy action enhancer

• Apr. 18, 2014

Tokyo University of Agriculture Mitochondrial fluorescence staining method July 11, 2014 Okayama University/Kochi University Antimalarial drug whose active ingredient is 5-aminolevulinic acid or a derivative thereof July 25, 2014 The University of Tokyo Cancer prophylactic and/or improving agent whose active ingredient is 5-aminolevulinic acid or a derivative thereof or a salt thereof

• Sept. 12, 2014

Single application Alaremycin derivative

• Nov. 14, 2014

Tokyo Institute of Technology Adult disease prophylactic and/or improving agent whose active ingredient is 5- aminolevulinic acid or a derivative thereof or a salt thereof

• Dec. 19, 2014

Single application Antimalarial drug whose active ingredient is alaremycin or a derivative thereof

• Dec. 26, 2014

Tokyo Institute of Technology

(1) About Granted Patents

114

Obtained on Dec. 19, 2014

Obtained a patent for a prophylactic/ameliorating composition containing 5-ALA as an active ingredient, for one or more adult diseases selected from a group consisting of hyperlipidemia, diabetes, hypertension, shoulder stiffness, postmenopausal disorders, gray hair, wrinkles, obesity, poor circulation, and constipation.

Obtained on Dec. 26, 2014

Obtained a patent for a prophylactic and/or therapeutic agent for malaria, consisting of the active ingredient alaremycin or a derivative thereof or a pharmacologically allowable salt thereof (filed jointly with the Tokyo Institute of Technology) The Tokyo Institute of Technology and SBI Pharmaceuticals predicted a new mechanism of action of antimalarial drugs based on the function

• f the existing antimalarial drugs and demonstrated

that alaremycin shows antimalarial activity as

• predicted. The patent acquired this time is related to

this mechanism. Published research papers on the results

• f clinical studies conducted jointly with

Hiroshima University, University of Hawaii, and the Institute of Medical Science, the University of Tokyo (1) About Granted Patents

Most Recent Patents Obtained by SBI Pharmaceuticals

115

Research on the Effects of 5-ALA on Various Target Illnesses is Proceeding

Target illnesses for which basic research and clinical research of 5-ALA and porphyrin are proceeding

Photodynamic diagnosis and therapy Chemotherapy-induced anemia Cancer chemotherapy-induced anemia

Phase I clinical testing completed in UK, Saitama Medical University has started Phase II

Diabetic disease

Bahrain Defense Force Royal Medical Service Hospital, Arabian Gulf Univ., RCSI, Hiroshima Univ., Univ. of Hawaii, etc.

Alzheimer's disease

Hokkaido Univ., etc.

Parkinson's disease

Shimane Univ., etc.

Neurogenic disease Chronic kidney disease

Kochi Univ., etc.

Mitochondrial diseases

Saitama Medical Univ., etc.

Malaria

The Univ. of Tokyo, Tokyo Institute of Technology, and SBI Pharmaceuticals

Preventing the aggravation of influenza

Tokushima Univ., etc.

Solar keratoses (cancer of skin)

photonamic GmbH & Co. KG in Germany sells in Europe The following target illnesses are under consideration for photodynamic diagnosis: prostate cancer, colon cancer, peritoneal dissemination, liver cancer, etc.

Glioma (malignant glioma)

Product launched by SBI Pharmaceuticals

Carcinoma vesicae

Doctor sponsored investigation has been ongoing at 5 universities, led by Kochi University.

Metabolic disease Others

Photodynamic therapy (Reference: Complied by SBIH from Research related material by 5-ALA and Porphyrin Research Society)

Cervical intraepithelial neoplasia

Nagoya Univ.

Preventing nephrotoxicity by an anticancer agent

Kochi Univ. and Kawasaki Medical School

(2) Medicine Business

Methicillin-resistant Staphylococcus aureus- infected ulcers

Osaka City University

Cardiac ischemia-reperfusion injury

The University of Oxford

116

R&D Progress in the Pharmaceutical Field of SBI Pharmaceuticals

Phase I Phase II Phase III Marketing ①Diagnostic Agent for Cancer Treatment (Brain tumor) ②Diagnostic Agent for Cancer Treatment (Carcinoma vesicae) *Designated as an orphan drug ③A Drug to Treat Cancer Chemotherapy-induced Anemia- ④Preventing cardiac ischemia-reperfusion injury “ALAGLIO”

(from Sept. 2013) (To be launched in spring 2015)

Endeavor to increase the indications

Investigator-led trial by Saitama Medical University, as the medical institution conducting the clinical trial ARO: Kitasato Academic Research Organization Investigator-led trial by Professor Houman, the University of Oxford, Planning to jointly submit a test plan to the Medicines and Healthcare Products Regulatory Agency (“MHRA”) soon (Phase II clinical trial will be implemented in department cardiothoracic surgery, University Hospitals Birmingham)

(2) Medicine Business

Planning an SBI corporate trial at the five universities conducting the physician-led trial

117

Research and development Production of bulk 5-ALA Production of products Sales

Process from development to sales:

SBI Pharmaceuticals

Cosmo Oil  SBI Pharmaceuticals

・The patent right and the right to obtain a patent related to 5-ALA and its production methods for use in pharmaceuticals, quasi-pharmaceuticals, cosmetics and food products (except for use in hair growth of head and body hair) ・Technical information

The outline of the exclusive license agreement:

(3) Development of an Integrated System SBI Pharmaceuticals / SBI ALApromo

Conclusion of a Patent Licensing Agreement with Cosmo Oil and Development of an Integrated System Extending from Product Development to Production and Sales

Further expansion of 5-ALA related businesses within an integrated system extending from product development to production and sales

118

Partner institutions for clinical study of diabetes utilizing 5-ALA

• Diabetes Department of the Bahrain Defense Force Royal Medical Service Hospital
• Arabian Gulf University Hospital
• Royal College of Surgeons in Ireland - Medical University of Bahrain (RCSI) etc.

Partner institutions for clinical study on the utilization of 5-ALA in the photodynamic diagnosis

• Arabian Gulf University Hospital
• King Hamad University Hospital
• Royal College of Surgeons in Ireland - Medical University of Bahrain etc.

Received approval from the National Health Regulatory Authority (“NHRA”) in Bahrain to conduct intervention test on type 2 diabetes at the Bahrain Defense Force Royal Medical Service Hospital and started administration on some subjects.

• Performed the first successful surgical removal of bladder cancer in the world using 5-

ALA as an intraoperative diagnostic drug, along with medical devices of SBI

• Pharmaceuticals. They have already succeeded in ten surgeries.
• Additionally, preparations are being made for the surgical removal of the cancer of the

prostate.

Increasing Partner Medical Institutions for Clinical Research on foods and medicines using 5-ALA in Bahrain

(4) Overseas development (Bahrain)

119

Started sales of the bicolor medical LED light source Aladuck LS-DLED (from Apr. 2014)

Business license for the sale and leasing of specially controlled medical devices obtained in Japan (Sept. 2013) Aladuck LS-DLED is the first medical device that SBI Pharmaceuticals sells in Japan

Two Types of Medical Light Source Devices Developed by SBI Pharmaceuticals

Laser light source LED light source

Completion of registration of medical device, and preparing for sales in Japan

(Clinical images: Examples of use as light source for diagnosis of cancer)

The violet LD light source Alcedo LS-VLD Launching soon in Japan

120

[Progress of the business]

• Steady Progress toward obtaining various licenses in China

The 5-ALA manufactured by Yian has already passed the safety and toxicity tests

• f a state designated institution, and meets the national standards of China.

(ⅰ) Materials license for containing 5-ALA in food products Planning to submit to the Ministry of Health (equivalent to the Ministry of Health, Labour and Welfare in Japan) SBI Pharmaceuticals to dispatch technical experts to support the response to a Ministry of Health examination (ⅱ) Product license for health products planned to be sold After efficacy trials, planning to submit to the China Food and Drug Administration (CFDA) Expecting to obtain a products license in the first half of 2015

• Completed construction of health food manufacturing plant

Procurement of equipment and materials, and work to install a clean room now in progress

• Sept. 2012:

Completion of the investment in Chinese bioventure Suzhou Yian Biotech Co., Ltd. (SBI Group’s shareholding ratio: 40%)

Business:

• Manufacture of an active ingredient of 5-ALA
• Production of medicines, health foods and cosmetics that contain 5-ALA

[Exterior of the plant]

(4) Overseas development (China)

Accelerating 5-ALA Related Business in China ①

121

• Efficacy study of 5-ALA in the diabetes mechanism is moving

forward at School of Life Sciences Fudan University. SBI Pharmaceuticals’ CTO Toru Tanaka and CSO Motowo Nakajima were invited by Fudan University as visiting professors.

• Procedures underway on-site for the establishment of an import and

sales company with the New Hope Group, China’s largest agribusiness operator, which exclusively handles 5-ALA containing health foods from Japan, in the Shanghai Free Trade Zone.

• The joint venture with the New Hope Group in China will exclusively

manage manufacturing and distribution of forages and fertilizers containing 5-ALA. Currently the efficacy test on fertilizers containing 5-ALA is being conducted by the New Hope Group.

Accelerating 5-ALA Related Business in China ②

Future Plan: Now negotiating with a Chinese company to out-license 5-ALA drug development technology as an entry into the pharmaceutical business

(4) Overseas development (China)

122

(5) Future Business Strategy in Biotechnology-related Business (SBI Biotech and SBI Pharmaceuticals)

1) Seek to complete an SBI Biotech IPO (Lead manager: Mizuho Securities) in 2015 and an SBI Pharmaceuticals IPO in three years. 2) Full-scale startup in preparation for establishment of an overseas production base through conclusion of a patent licensing agreement with Cosmo Oil and legal establishment of an integrated system extending from production to sales of pharmaceuticals, health foods, and cosmetics containing 5-ALA 3) SBI Pharmaceuticals will engage in out-licensing in the pharmaceuticals sector. It has already received and is considering approaches from pharmaceutical majors in several fields, including Alzheimer’s and ulcerative colitis. 4) Seek to enter into alliances with major suppliers concerning health foods and cosmetics containing 5-ALA.

123

[Reference] The Company’s current stock price, and our method in calculating the estimated corporate value

124

Each Business Segment Valuation is Conservatively Estimated

Business valuation per share: JPY 2,919 Corporate Value by Business Segment Valuation

■ Sum of the values by segment (as of Jan. 28, 2015)

(JPY billion)

Valuation of each segment (theoretical value)

Financial Services 459.7 (+)* Asset Management 115.6 Biotechnology-related 63.1 Housing and Real Estate 17.1 Sum total

655.5 (+)

* Other businesses including SBI MONEY PLAZA and SBI Guarantee are also profitable, but these businesses are not included in this valuation estimation.

Of the major Group companies, 12 are profitable companies that are not included in the above calculations (Total FY2013 Operating Income: approx. JPY 1.6bn)

* As for specific formula, refer to the after-mentioned reference part.

125

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Dec-11 Dec-12 Dec-13 Dec-14

SBI Holding’s Recent Stock Price

Market cap (based on the closing price on Jan. 28, 2015): JPY 290.8bn

Closing price on Jan. 28, 2015: JPY 1,295 Recent high:

• Apr. 24, 2013: JPY 1,990

Expanded by 4.3x

[Last 3 years]

Source: Bloomberg

Record low:

• Sept. 5, 2012: JPY 463

126

2.0 1.1 0.5 0.9 0.5 0.4 0.6 0.8 0.8

1.4 1.1 0.9 0.8 0.8 0.8 1.0 1.1 0.0 0.5 1.0 1.5 2.0 2.5 3.0 SBI TSE 1st Section

Change in PBR of SBI Holdings

PBR = Closing price at the end of FY / Net assets per share at the end of FY

(x)

TOPIX: 1.2 Bank: 0.6 Securities and commodities: 1.2 Other financials: 1.0 (As of Dec. 31, 2014) (As of Jan. 28, 2015) The stock price of SBI Holdings: JPY 1,295 PBR: 0.8 SBI Holdings’ PER based on the EPS of 1H FY2014 is 10.4 *2

(As of Jan. 28, 2015)

[Reference]

SBI Holdings’ PER based on forecast EPS PER: 9.7 (Nikkei Kaisha

Joho)

6.2 (Japanese

company handbook) End of FY2006 End of FY2008 End of FY2010 End of FY2012 End of FY2013

• Jan. 28,

2015

*1 PBR of SBI Holdings for Jan. 28, 2015 is calculated based on the BPS of the end of Sept. 2014. *2 For convenience, EPS of 1H FY2014 (JPY 119.11) is used to calculate SBI Holdings’ PER. Note: PBR of SBI Holdings prior to FY2011 is calculated based on J-GAAP BPS.

Source: TSE website *1

127

0.0 1.0 2.0 3.0 4.0 5.0

Nomura Matsui Monex kabu.com JAFCO SBI

PBR Comparison with Competitors

(As of Jan. 28, 2015) PBR = Closing price at the end of FY / Net assets per share at the end of FY

(x) SBI 0.8

Matsui 3.0 kabu.com 2.7 JAFCO 1.1 Monex 0.9 Nomura 0.9

End of FY2006 End of FY2008 End of FY2010 End of FY2012

• Jan. 28,

2015

Source: Bloomberg *PBR for Jan. 28, 2015 is calculated based on the BPS of the end of Sept. 2014. *PBR of Monex and SBI Holdings prior to FY2011 are calculated based on J-GAAP BPS.

128

SBIH’s market cap as of Jan. 28 is likely to fall below the estimated valuation of SBI SECURITIES

Valuation by Segment Estimated by SBI (1) Financial Services Business ① SBI SECURITIES -(i)

① SBI SECURITIES

Valuation is conservatively estimated at JPY 298.2bn

(based on the closing prices of Jan. 28, 2015)

Estimation of the valuation is as follows:

Calculated according to the Comparable Public Company Analysis

Compares the market cap and profits of a comparable public company, Matsui Securities. Valuation of SBI SECURITIES is calculated as the mean of the two values [(A) and (B)] resulting from the equations below

× SBI SECURITIES’s net income (FY2013) ... (A) Matsui’s PER (*1) × SBI SECURITIES’s net asset (*3) (as of Dec. 31, 2014) ... (B) Matsui’s PBR (*2)

*1 PER of Matsui is calculated by its net income per share for FY2013. *2 PBR of Matsui is calculated by its BPS as of Sept. 30, 2014. *3 Represents SBI SECURITIES’ balance of net asset excluding short-term loans receivable from SBIH

129

2,054 3,149

500 1,000 1,500 2,000 2,500 3,000 3,500

• Mar. 2010
• Mar. 2011
• Mar. 2012
• Mar. 2013
• Mar. 2014
• Dec. 2014

SBI SECURITES Matsui

4.1 8.8

2 4 6 8 10

• Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 Dec. 2014

SBI SECURITIES Matsui

Valuation by Segment Estimated by SBI (1) Financial Services Business ① SBI SECURITIES -(ii)

Is SBI SECURITIES’ valuation reasonable?

Comparison of SBI SECURITIES Matsui Securities

*Calculated by the closing prices of Jan. 28, 2015

(9 Months FY2014)

SBI SECURITIES Matsui Securities Valuation (market cap) * JPY 298.2bn JPY 273.0bn Deposit assets (Dec. 2014) JPY 8.8tn JPY 2.1tn Number of accounts

(As of the end of Dec. 2014)

3.15 million 0.98 million

Share of individual stock brokerage trading value

37.5% 12.9% Operating income JPY 25.0bn

(up 0.3% YoY)

JPY 16.4bn

(down 24.5% YoY)

No.1 No.1 No.1 No.1

(JPY trillion)

Customers’ Deposit Assets Customer account

(thousand )

130

*1 Compiled by the Company from the materials disclosed by the listed local banks of which the deposit balance exceeds JPY 3tn *2 Estimated net income for FY2014 is calculated by doubling the 1H FY2014 net income

SBI Sumishin Net Bank’s estimated net income (FY2014) (*2) Median value of estimated PERs of listed local banks

• f which the deposit balance exceeds JPY 3tn (*1)

[Reference] Valuation distribution based on the abovementioned pro forma calculation

102.0 237.9

50 100 150 200 250

(JPY billion)

PER

(FY2014(E))

(Minimum) (Maximum)

◆168.9bn

(Median value)

Valuation by Segment Estimated by SBI (1) Financial Services Business ② SBI Sumishin Net Bank

② SBI Sumishin Net Bank

(Shareholding of the SBI Group: 50.0%)

Estimates the valuation of SBI Sumishin Net Bank with high growth potential in terms of profitability and scale at JPY 168.9bn 

JPY 84.4bn (based on the closing prices of Jan. 28, 2015)

Estimation of the valuation is as follows:

Calculated according to the Comparable Public Company Analysis

Compares the profits of comparable public companies of which the deposit balance exceeds JPY 3tn as of the end of Mar. 2014

×

131

③ SBI Liquidity Market (including SBI FXTRADE)

Compares the market cap and profits of comparable public companies, namely Money Partners and MONEY SQUARE JAPAN

Estimation of the valuation is as follows:

Calculated according to the Comparable Public Company Analysis

* PER of Money Partners and MONEY SQUARE JAPAN is calculated by its net income per share for FY2013 .

<Reference> Acquisition of CyberAgent FX by Yahoo Japan (Jan. 31, 2013)

Valuation by Segment Estimated by SBI (1) Financial Services Business ③ SBI Liquidity Market

Acquired all shares of CyberAgent FX (16,200 shares) at JPY 21.0bn

Valuation is estimated at JPY 26.3bn (based on the closing price of Jan. 28, 2015)

CyberAgent FX (FY2011) SBI Liquidity Market (FY2013) JPY 8,498m Operating revenue JPY 10,524m JPY 4,021m Operating income JPY 1,901m JPY 2,289m Net income JPY 1,165m JPY 9,067m Net assets JPY 4,087m

Operating income before allocation to SBI SECURITIES was JPY 8,527m

{(Money Partner’s PER + MONEY SQUARE JAPAN’s PER)}(*) 2 × Net income of SBI Liquidity Market (cons.) (FY2013)

132

Valuation by Segment Estimated by SBI (1) Financial Services Business ④ SBI Japannext

④ SBI Japannext

Compares the profit of a comparable public company, namely Japan Exchange Group

Estimation of the valuation is as follows:

Calculated according to the Comparable Public Company Analysis

(Shareholding of the SBI Group: 52.8%)

Estimates the valuation of SBI Japannext at JPY 34.8bn

 JPY 18.4bn (based on the closing prices of Jan. 28, 2015)

SBI Japannext’s estimated net income (FY2014) Japan Exchange Group’s PER (*) ×

* PER of Japan Exchange Group is calculated by the estimated net income per share for FY2014.

133

SBI’s shareholding

• pct. (%)

Classification Listed market Market cap (JPY billion)

SBI’s equity interest of market cap (JPY billion)

Morningstar Japan

49.2

Consolidated subsidiary JASDAQ

22.0 10.8

SOLXYZ

26.3

Equity method associate

JASDAQ

7.2 1.9

Sum of the market cap of listed subsidiaries and equity method associates

29.2

12.7

⑥ Other listed subsidiaries and equity method companies in this business segment

Valuation by Segment Estimated by SBI (1) Financial Services Business

⑤ SBI Comparison Website Business / ⑥ Other Financial Services Business

* SBI’s shareholding percentage corresponds to a figure based on the IFRS criteria that excludes a percentage of outside shareholder's interest of subsidiary companies and subsidiary funds of the Group.

(Based on the closing price of Jan. 28, 2015)

⑤ SBI Comparison Website Business

Compares the profits of comparable public companies, namely Kakaku.com and WebCrew

Estimation of the valuation is as follows:

Calculated according to the Comparable Public Company Analysis

* PER of Kakaku.com and WebCrew are calculated by their estimated net income per share for FY2014.

Valuation is estimated at JPY 19.6bn (based on the closing price of Jan. 28, 2015)

{(Kakaku.com’s PER + WebCrew’s PER)}(*) 2 × Net income of SBI Comparison Website Business (FY2013)

134

① SBI SECURITIES ⑥ Total market cap upon SBIH’s shareholding of other listed subsidiaries and equity method companies, in total 2 companies, in this segment ② SBI Sumishin Net Bank

Upon comparison with similar listed companies calculated conservatively as JPY 298.2bn

The sum of market caps of Morningstar Japan and SOLXYZ (Shareholding of the SBI Group)

JPY 12.7bn

Estimated the valuation of SBI Sumishin Net Bank that has high growth potential in terms of profitability and scale at JPY 168.9bn  JPY 84.4bn (Shareholding of the SBI Group: 50.0%)

Total of the valuation above: JPY 459.7bn (The SBI Group’s total shareholding) Valuation by Segment Estimated by SBIH (1) Financial Services Business: Total Valuation of the Businesses

③ SBI Liquidity Market (cons.)

Upon comparison with similar listed companies calculated as JPY 26.3bn

④ SBI Japannext

Upon comparison with similar listed companies estimated the valuation at JPY 34.8bn 

JPY 18.4bn (Shareholding of the SBI Group: 52.8%)

(based on the closing prices of Jan. 28, 2015)

⑤ SBI Comparison Website Business

Upon comparison with similar listed companies calculated as JPY 19.6bn

(based on the closing prices of Jan. 28, 2015) (based on the closing prices of Jan. 28, 2015) (based on the closing prices of Jan. 28, 2015) (based on the closing prices of Jan. 28, 2015) (based on the closing prices of Jan. 28, 2015)

135

Valuation by Segment Estimated by SBIH (1) Financial Services Business ⑦ Other Financial Services Businesses (Profitable Entities)

Business lineup

Operating income for FY2013 (JPY billion) SBI’s shareholding

• pct. (%)

SBI MONEY PLAZA Insurance agency, financial instruments intermediary service provider, housing loan agency

0.9

100.0

CEM Corporation Real estate secured loans

0.5

79.7

SBI Guarantee Various guarantee services including mainly the guarantee of nonpayment

• f rent

0.1

100.0 There are many other profitable business entities in this segment

* SBI’s shareholding percentage corresponds to a total percentage based on the IFRS criteria for subsidiary companies and subsidiary funds of the Group.

Based on the “Selection and Concentration” policy for the Financial Services Business, regardless of profit contributions, a sale, an IPO or reorganizations within the Group of non-core businesses will be accelerated, though a judgment

• f the existence or strength of synergies with one of the three core businesses

Proceeds generated may be appropriated to strengthen the three core businesses

136

Asset Management Business

<Reference> JAFCO’s Market Cap: JPY 192.9bn (based on the closing price of Jan. 28, 2015)

Valuation by Segment Estimated by SBIH

(2) Asset Management Business ① Valuation Measuring Method

Valuation for this segment is estimated at approx. JPY 115.6bn

Operational investment securities and other investment securities held are quarterly evaluated through fair value, and the calculated number above reflects the fair value of SBIH's ownership

(ii) Value of SBI Investment (based on the closing price of Jan. 28, 2015)

• Approx. JPY 13.0bn

(i) Value of holding securities (at the end of Dec. 2014) Approx. JPY 95.7bn

Valuation estimation is the sum of the valuation (i)-(iii) below.

Calculated according to the Comparable Public Company Analysis

Compares the market cap and profit of the comparable public company, JAFCO

Provisional amount of SBI Investment’s net income that represents the actual status deducting expenses produced relevant to the holding company function held by it × JAFCO’s PER (*)

(* Valuation excluding assets such as securities hold)

*PER of JAFCO is calculated by the estimated net income per share for FY2014. The estimated net income per share used in the calculation is the average between that of Japanese company handbook and Nikkei Kaisha Joho.

137

SBI’s share- holding pct. (%) Classification Listed market Market cap (JPY billion)

SBI’s equity interest of market cap (JPY billion)

SBI AXES

42.7

Consolidated subsidiary

KOSDAQ of KRX

7.2* 3.1

SBI Investment KOREA

43.9

Equity method associate

KOSDAQ of KRX

8.8* 3.8

Sum of the market cap of listed subsidiaries and equity method associates

15.9

6.9

(Based on the closing price of Jan. 28, 2015. *Calculated by the exchange rate as of Jan. 28, 2015.)

(iii) Total market cap of listed subsidiaries and equity method associates

Valuation by Segment Estimated by SBIH

(2) Asset Management Business ② Other Profitable Business Entities

Business lineup

Operating income for FY2013 (JPY billion) SBI’s shareholding

• pct. (%)

Phnom Penh Commercial Bank

Overseas Business

Commercial Bank

0.5 47.6

[Other profitable businesses of the Asset Management Business that are not included in the above valuation]

* SBI’s shareholding percentage corresponds to a figure based on the IFRS criteria that excludes a percentage of outside shareholder‘s interest of subsidiary companies and subsidiary funds of the Group.

138

② Other companies in the Biotechnology-related Business SBI Biotech (SBI’s shareholding percentage*: 38.3%)

Considering future strategies, which includes an IPO and M&A on the premise of strategic alliance

Biotechnology-related Business

Valuation by Segment Estimated by SBIH

(3) Biotechnology-related Business

Each bioventure company has multiple promising pipelines, and the Biotechnology- related Business will become a core business that makes a substantial contribution through progress in areas including pharmaceutical clinical research in Japan and

• verseas.

Total valuation of the Biotechnology-related Business is estimated at

• approx. JPY 63.1bn

① SBI Pharmaceuticals

SBIH’s equity interest

(excluding external holdings)

Based on SBIH’s equity interest (excluding external holdings) as of the end of Dec. 2014, the amount is calculated to be approx. JPY 46.6bn

Besides, the total shareholder value of this business includes the estimated shareholder value of 1 IPO scheduled company and 1 listed company, with the estimation based on SBIH's shareholding of paid-in capital and the market values of operational investment securities that SBIH owns.

Estimation of the valuation is as follows:

Market value at the point of partial transference of former SBI ALApromo’s shares

Number of shares issued

× ×

* SBI’s shareholding percentage corresponds to a figure based on the IFRS criteria that excludes from the total shareholding percentage (78.2%) the percentage of outside shareholder's interest of subsidiary companies and subsidiary funds of the Group.

139

Housing and Real Estate Business

SBI’s share- holding pct. (%) Classification Listed market Market cap (JPY billion)

SBI’s equity interest of market cap (JPY billion)

SBI Life Living

73.3

Consolidated subsidiary

TSE Mothers

13.3

9.8

② Market cap of a listed subsidiary in the Housing and Real Estate Business Sum of the calculated value of the commercial real estate properties of SBIH as of the end of Dec. 2014 were calculated, along with SBI Life Living's market cap.

(Balance of investment real estate for SBI Savings Bank and SBI Life Living are excluded)

Estimation of the valuation is as follows:

As of the end of Dec. 2014, valuation is approx. JPY 7.3bn

(based on the closing price of Jan. 28, 2015)

Valuation by Segment Estimated by SBIH

(4) Housing and Real Estate Business Valuation for the Housing and Real Estate Business estimated at approx. JPY 17.1bn

+ ① Value of the commercial real estate properties Asset Value = Balance of investment real estate Balance of real estate included in tangible assets

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[Appendix]

141

1st

“Oricon customer satisfaction ranking” of 2014 [Online securities comprehensive ranking]

For 8 years!!

<Evaluation item> 12 items, such as “commissions & dealing cost,” “easy account opening,” “variety of products,” “provision of Information” and “analytics tools,” etc.

Customer Service Center

HDI (Help Desk Institute) Certification in 2014 [Securities Industry] “Call-center Contact Ranking” Achieved the highest rank “three stars”

For 5 years!!

Highest Award for the Category

“CCJA 2014” (11th Contact Center Award) Received the highest award for “Best Operation” category

For 4 years!! First ever

Chairman’s Prize

Japan Telecom Users Association 18th Corporate Telephone Response Contest in 2014

Prized 4 years in a row!!

Official Website

HDI (Help Desk Institute) Certification in 2014 [Securities Industry] “Support Portal Raking (Official Website)” Achieved the highest rank “three stars”

5th time 4 years in a row!!

Continuously Achieving a High Customer Satisfaction Assessment ① SBI SECURITIES

142

1st JCSI Customer Satisfaction Survey (Japanese Customer Satisfaction Index) Banking industry For 6 years! 1st “10th Nikkei Financial Institution Ranking” Customer Satisfaction by generations, 20s and 30s For 2 years! 1st JMA Research “Assessment of Mortgage Products” by mortgage personnel For the first time! 1st “Oricon customer satisfaction ranking” of 2014 [Online banking] 4th time

Appraised as No. 1 among the 7 banks (*) in all 5 categories, which were: “Mortgage which you want to utilize,” “Mortgage which you want to recommend,” “Mortgage which interest is attractive,” “Mortgage which has best collection of ancillary services,” and “Mortgage which is reliable in an emergency.”

* The comparison among 4 city banks (The Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, Sumitomo Mitsui Banking Corporation and Resona Bank) and 3 Internet banks (SBI Sumishin Net Bank, Sony Bank and Rakuten Bank)

Continuously Achieving a High Customer Satisfaction Assessment ② SBI Sumishin Net Bank

143

1st Diamond Weekly “Auto Insurance Premium Ranking” For 7 years !

“Auto Insurance Premium Ranking: SBI Insurance takes No.1 in the most categories”

1st Oricon customer satisfaction ranking FY 2015 Auto Insurance Category “Auto Insurance Premium Ranking” For 6 years ! 1st Kakaku.com / Auto Insurance Satisfaction Ranking (2014) Premium Section For 5 years ! 1st JCSI (Japanese Customer Satisfaction Index) Customer Satisfaction Survey 2014 Nonlife insurance industry customer satisfaction

For the

First Time! HDI-Japan HDI’s Call-center Customer Satisfaction Ratings 2014 Top “three-star” rating in the Support Portal (Official Website) Category For 3 years !

Official Website

* In the Jan 17, 2015 special issue

Continuously Achieving a High Customer Satisfaction Assessment ③ SBI Insurance

144

Number of Companies and Consolidated Employees of the SBI Group

• Mar. 31, 2014
• Dec. 31, 2014

Consolidated subsidiaries (companies)

139 140

Consolidated partnerships (partnerships)

36 34

Total consolidated subsidiaries (companies)

175 174

Equity method companies (companies)

38 38

Total Group companies (companies)

213 212

Number of Group companies

• Mar. 31, 2014
• Dec. 31, 2014

Total employees (persons)

5,352 5,225

Number of consolidated employees

145

Assets Under Management of the SBI Group

(As of the end of Dec. 2014)

Breakdown by region Amount Japan 86.0 China 31.5 Korea 23.4 Taiwan 1.9 Southeast Asia 10.9 India 2.0 U.S. 29.1 Others 3.3 Total 188.1 Breakdown by Industry Amount IT/Internet 25.9 Biotechnology/Health/Medical 42.1 Services 18.8 Materials/Chemicals 2.1 Environmental/Energy 19.7 Retail/Food 14.3 Construction/Real estate 0.6 Machine/Automobile 8.5 Finance 35.4 Others 20.8 Total 188.1

Private equity, etc. JPY 309.6bn

Investment trusts 116.7 Investment advisory 94.8 Investment companies 3.6 (Including JPY 121.5bn of both cash and commitment amount to be paid in)

Investment trusts, etc. JPY 215.1bn

*1 Calculated by the exchange rate as of the end of Dec. 2014 *2 Amounts are rounded to the nearest JPY 100m *3 Composed of cash in funds and unpaid capital which is to be paid

• n a capital call.

(*3)

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